SFIO launches probe into IndusInd Bank over accounting and derivative issues

The Serious Fraud Investigation Office (SFIO) has launched a formal probe into the affairs of IndusInd Bank under Section 212 of the Companies Act, 2013, the private sector lender revealed in a regulatory filing on Wednesday. The bank said it received a letter dated December 23, 2025 from the SFIO requesting information and documents related to the investigation.

According to the filing, the investigation relates to issues previously disclosed by the bank, including the accounting treatment of internal derivatives trades, unexplained balances reflected under “other assets” and “other liabilities,” and certain concerns related to interest income and fees from its microfinance business.

“We inform you that the bank has received a letter dated December 23, 2025 from the SFIO, regarding investigation into the affairs of IndusInd Bank Ltd under Section 212 of the Companies Act, 2013 seeking relevant information,” the bank said in a regulatory filing on Wednesday.

Section 212 enables the central government to refer complex and serious corporate fraud cases to the SFIO, giving the agency broad authority to examine financial records, subpoena individuals and investigate suspected misconduct in the public interest.

IndusInd Bank had earlier informed the stock exchanges on December 18, 2025, that these matters had already been reported to the SFIO on June 2, 2025, in line with regulatory requirements. At the time, the bank said it had held preliminary discussions with SFIO officials and was awaiting formal written communication, which has now been received.

The lender explained that the reporting was done under the Reserve Bank of India’s Key Directives on Fraud Risk Management, issued on July 15, 2024. These rules require banks to report all frauds involving Rs 1 lakh crore or more not only to the RBI but also to the SFIO of the Ministry of Corporate Affairs. Accordingly, IndusInd Bank said it had proactively shared details regarding derivative accounting issues, undocumented balance sheet items and income related to microfinance with the investigating agency.

The bank said it is fully cooperating with law enforcement authorities and will provide all information requested as part of the investigation. It also confirmed that the disclosure had been announced through filings with stock exchanges and on its website.

The SFIO investigation comes on the back of significant accounting concerns reported earlier this year. In April, the bank’s external auditor had highlighted a cumulative negative impact of Rs 1,959.98 crore on its profit and loss account as of March 31, 2025, as a result of discrepancies in the derivatives portfolio. On April 15, IndusInd Bank separately disclosed the findings of another external agency, which estimated an adverse impact of Rs 1,979 lakh crore on the bank’s net worth due to accounting lapses linked to derivatives transactions.

The bank estimated that these discrepancies would result in a negative impact of about 2.27% on an after-tax basis on its net worth as of December 2024. In a subsequent filing, it pegged the impact at about 2.35% of net worth, underscoring the material nature of the accounting issues now subject to regulatory scrutiny.

IndusInd Bank shares closed at Rs 848.25, down 0.05%.