Clarification Issued After Share Price Drops Nearly 5% on Audit Speculation
IndusInd Bank on Monday clarified that it has not appointed Ernst & Young (EY) for a forensic audit, contrary to recent media reports suggesting a second probe into its microfinance portfolio. The clarification comes after shares of the bank fell 4.79% to ₹788.55 on the NSE following a report by The Economic Times that the lender had roped in EY to conduct a second forensic examination, focused on a ₹600 crore discrepancy in accrued interest income from its microfinance operations.
In a formal exchange filing, the bank stated that EY was engaged solely to support the Internal Audit Department (IAD) in reviewing records related to the microfinance business and not for an independent forensic audit.
Highlights:
IndusInd Bank says EY not appointed for forensic audit.
EY’s role limited to supporting internal audit on microfinance records.
Stock fell nearly 5% on April 22 amid speculation about a second audit.
Ongoing Internal Review of Microfinance Business Amid Accounting Concerns
According to IndusInd Bank’s filing, its Internal Audit Department is conducting a review of the Microfinance Institution (MFI) business following the emergence of certain concerns. The bank clarified that EY is working in an advisory capacity to assist this internal review.
The statement read:
“As a part of the process of finalization of accounts, the Bank’s Internal Audit Department (IAD) is conducting a review of the Bank’s MFI business to examine certain concerns which have been brought to the Bank’s attention. In connection with this exercise, Bank is engaged with EY to assist the IAD in reviewing certain records of the Bank. The review by the Bank is ongoing.”
The development comes at a sensitive time for the bank, which is facing multiple audit reviews across its business verticals, including its forex derivatives portfolio and microfinance book.
Highlights:
MFI portfolio under internal review by IndusInd’s audit team.
EY assisting with record verification, not an independent probe.
Discrepancies in accrued interest income amounting to ₹600 crore reported.
Forex Derivatives Under External Scrutiny by PwC and Grant Thornton
Parallel to the microfinance review, IndusInd Bank is dealing with scrutiny over its accounting practices for its foreign exchange derivatives book. Grant Thornton Bharat (GTB) is currently investigating inconsistencies in how the bank accounted for these transactions.
Additionally, PricewaterhouseCoopers (PwC) was brought in earlier this month to conduct an independent audit of the forex derivative exposures, which initially estimated potential losses at ₹1,600 crore. However, PwC’s revised estimate suggests the impact could be significantly larger, at ₹1,979 crore.
These multiple probes have intensified investor concerns, leading to increased volatility in IndusInd Bank stock, particularly among institutional shareholders seeking clarity on asset quality and financial reporting.
Highlights:
PwC estimates ₹1,979 crore in potential losses from forex derivatives.
Grant Thornton probing accounting irregularities in forex transactions.
Simultaneous reviews raise investor apprehension over governance standards.
Market Reaction and Investor Sentiment
The sharp decline in IndusInd Bank’s share price underscores heightened sensitivity to governance and disclosure issues, especially in the context of rising audit-led re-evaluations across Indian financial institutions. Analysts warn that confusion between forensic and internal audits can trigger investor unease, as seen in this case.
While the bank has attempted to differentiate the nature of EY’s engagement, market sentiment remains cautious until final audit reports from PwC and Grant Thornton are made public. The next set of quarterly financial results is expected to provide more transparency into the extent of discrepancies and provisions made.
Highlights:
Stock price volatility driven by audit ambiguity and media speculation.
Analysts await detailed disclosures in upcoming financial results.
Investor focus on clarity in governance, audit outcomes, and provisioning strategy.
