According to sources and CNBC TV18 reports, the Mumbai Police’s Economic Offences Wing (EOW) is speeding up its inquiry into IndusInd Bank after a ₹258 crore “unsubstantiated” transaction surfaced. This latest finding follows an earlier accounting error in the bank’s derivatives portfolio of ₹1,950 crore, bringing the total claimed mismatch to almost ₹2,000 crore. The entry in question was found in the 2015–2024 Grant Thornton audit report, and it is being investigated for its potential to be used to “dress up” the bank’s books and increase net interest revenue during failing periods.
Forensic Audit Highlights Unverified Transactions:
Grant Thornton India, the auditor appointed by IndusInd Bank, flagged manual entries aggregating ₹258 crore that lack genuine internal trade links and supporting documentation. These entries, the forensic report explains, resulted in the overstatement of the bank’s balance sheet and the creation of excessive assets. Management is suspected to have used these irregular entries selectively to improve the reported net interest income in certain quarters. The forensic audit also suggested that senior leaders were aware of the discrepancies by 2023, though the board was officially notified only in March 2025, raising further governance concerns.
EOW Summons Senior Executives for Clarification
As part of its investigation, the EOW has summoned key IndusInd Bank management, including Assistant Vice President Subhash Maheshwari, for questioning regarding the disputed accounting entries. Multiple senior officials, including former CEO Sumant Kathpalia and ex-CFO Gobind Jain, have already provided statements as the inquiry proceeds. Initial probes have not yet found evidence of personal enrichment or fund siphoning to shell companies, but investigators remain focused on dissecting accounting processes and controls.
Halfway Through Investigation, EOW Finds No Evidence of Fund Siphoning So Far:
According to updates from the Economic Offences Wing, the investigation into IndusInd Bank’s accounting discrepancies has reached its halfway point, with no concrete evidence yet uncovered of fund siphoning to personal accounts or shell companies by senior management. Authorities have questioned six to seven employees, including former CEO Sumant Kathpalia, ex-CFO Gobind Jain, and former Deputy CEO Arun Khurana, focusing on alleged lapses at the treasury desk. The probe is examining whether the ₹258 crore entry and other adjustments were genuine mistakes or indicative of broader internal control failures, with investigators now set to summon additional officials like Siddharth Banerjee, head of global market and financial institutions group, for clarification. The EOW anticipates a clearer picture of the case and any criminal liability by the end of October, with current findings suggesting omissions in following prescribed processes rather than deliberate personal enrichment.
Impact on Banking Sector and Next Steps:
Following the emergence of this case, IndusInd Bank clarified in a stock exchange filing that the ₹255 crore irregularities were part of a previously completed probe, and the impact was reflected in earlier financial statements. However, the ongoing review has prompted concerns regarding broader industry governance and risk management practices. The Mumbai EOW expects to complete further witness interviews and forensic analyses by the end of October, which will determine if regulatory breaches or criminal conduct occurred. As the investigation continues, the issue highlights the necessity for stricter internal controls and compliance frameworks in India’s banking sector.
