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Informist, Monday, Jun. 9, 2025

 

By Krity Ambey

 

NEW DELHI – The matter pertaining to fraud at IndusInd Bank Ltd. may feature in the discussions among the heads of India's financial sector regulators and the finance ministry officials at the 29th meeting of the Financial Stability and Development Council, a government official said. The meeting is scheduled for Tuesday in Mumbai.

 

The council, chaired by Finance Minister Nirmala Sitharaman, will take an overall stock of the Indian financial sector on Tuesday and it is likely that the IndusInd Bank case features in the discussions as it is the latest "knotty subject" in the sector, the official said.

 

IndusInd Bank is currently going through a tumultuous phase with a forensic audit underway. In March, the bank had reported a hit of INR 20 billion to its net worth due to discrepancies in derivatives accounting. After that, auditors have detected more accounting irregularities at the bank and it is in the process of appointing a new leadership team, including a new chief executive officer.

 

After an independent audit, the bank said the accounting hit from these trades had been estimated at INR 19.79 billion and it would be "appropriately" reflected in the statements for 2024-25 (Apr-Mar). The segment results showed a loss of INR 14.57 billion on account of treasury operations in the March quarter. The shares of the bank closed 1.68% higher on Monday at INR 836.65 on the National Stock Exchange.

 

The Securities and Exchange Board of India is currently investigating fraud and insider trading by the bank's former managing director and chief executive officer Sumant Kathpalia and four other officials. In its interim order, the capital markets regulator has banned the five officials from trading in the stock market. SEBI suspects that the people involved in the case were aware of the discrepancies in the derivatives portfolio as early as December 2023.

 

Meanwhile, the Reserve Bank of India is also monitoring the evolving situation at the bank. "We will keep monitoring the system as a whole," RBI Deputy Governor Swaminathan J. had said Friday at the post-policy press conference while answering a question related to IndusInd Bank. "Each of these crisis gives us some lessons, we sharpen our supervisory tools and we calibrate our supervisory approach basis the lesson that we learn from this."

 

RBI Governor Sanjay Malhotra had said that the banking regulator will step in and take an action in the matter pertaining to IndusInd Bank if required. Malhotra will meet SEBI Chairman Tuhin Kanta Pandey at the upcoming FSDC meeting, along with Finance Secretary Ajay Seth, Financial Services Secretary M. Nagaraju, Pension Fund Regulatory and Development Authority Chairperson Sivasubramanian Ramann, and International Financial Services Centres Authority Chairman Kalyanaraman Rajaraman.

 

This will be the first meeting of the council after Sitharaman presented the Union Budget for FY26. The council had last met on Feb. 21, 2024.

 

Set up in 2010, FSDC deals with issues relating to financial stability, financial sector development, inter–regulatory coordination, financial literacy, financial inclusion, and macro prudential supervision of the economy, including the functioning of large financial conglomerates. No funds are separately allocated to the council for undertaking its activities.   End

 

Edited by Deepshikha Bhardwaj

 

 

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