IndusInd Bank ₹2,000 Crore Lapse: Financial Watchdog Seeks RBI Clarification in Forex Hedging Probe

The Economic Offences Wing (EOW) of the Mumbai Police is preparing to seek clarity from the Reserve Bank of India (RBI) as part of its ongoing investigation into the alleged ₹2,000 crore accounting lapse at IndusInd Bank. The move marks a significant step in a complex probe that has already resulted in multiple rounds of questioning of the bank’s former top executives.

According to officials, the EOW has recorded statements from about a dozen individuals associated with the bank, including former senior management figures. Investigators say they are now examining whether certain treasury and foreign exchange practices followed by the previous leadership were permissible under existing RBI regulations.

At the centre of scrutiny is the bank’s foreign currency hedging activity, which several employees have claimed was routine practice. EOW sources indicated that only the RBI can clarify whether such hedging falls within the regulatory boundaries for banks and whether the procedures followed at IndusInd adhered to those norms. This clarification will help determine whether any legal violations occurred.

The investigation has also uncovered additional financial discrepancies beyond the originally identified ₹1,900 crore gap. A separate ₹250 crore entry is now under examination, widening the scope of inquiry. Statements provided to investigators suggest that provisioning practices adopted since 2023 may have contributed to the accounting lapses, with internal adjustments allegedly masking shortages in certain accounts.

According to documents reviewed by investigators, the trading desk—reportedly set up under the watch of then Deputy CEO Arun Khurana—played a central role in the transactions now under scrutiny. The findings of a Grant Thornton audit, which highlighted that key management personnel were aware of discrepancies as early as 2023, are also being examined by the EOW.

Police officials are also evaluating whether the lapses amount to criminal misconduct. The complaint filed by the bank’s current management alleges that past executives caused substantial harm to the institution, not only through irregular accounting practices but also by allegedly engaging in insider trading. The claim is that artificially inflated share valuations enabled certain officials to profit significantly before the inconsistencies were disclosed.

The revelations triggered a steep fall in the bank’s share price earlier this year, resulting in a major loss in market capitalisation. Former senior executives—including the ex-CEO, ex-CFO, and ex-Deputy CEO—have been questioned multiple times and may face further summons as investigators cross-verify their statements with financial records and audit findings.

With questions surrounding a decade-long pattern of treasury irregularities, the next phase of the probe hinges on guidance from the RBI. The watchdog’s inputs on regulatory compliance will play a decisive role in determining potential liabilities and the future course of the investigation.