The bank used to follow accrual accounting for internal derivative trades between the asset-liability management desk and the treasury, while external counterparties’ trades were marked to market. This allowed IndusInd to defer losses internally while prematurely booking gains externally, overstating earnings.
When the discrepancies became significant in 2023, the RBI intervened, and asked for an internal review. By March 2024, the RBI had banned internal derivatives trading by banks. The RBI had hired EY and PwC to investigate the matter, however, neither of the two managed to make any headway in the matter. In February 2025, a team of the RBI investigated the matter and identified the derivative losses.
Meanwhile, the Reserve Bank of India (RBI) sources said that derivative and MFI-related losses would wipe out IndusInd Bank’s fourth quarter profits, and the bank might even show a minor loss during the quarter.
The derivative loss of Rs 1,960 crore would be reflected in the fourth quarter financial statements of the bank. Additionally, the bank will have to provide for Rs 320-odd crore for NPAs in the microfinance loan book.
“In a normal situation, the bank might have posted Rs 1,800 crore in profit, but given the derivative losses and the provision for MFI loan book, the bank would post a small loss in the fourth quarter,” sources told TNIE.
