MUMBAI: IndusInd Bank said it is evaluating findings from an independent forensic review that flagged potential concerns requiring assessment from an insider trading standpoint.
IndusInd Bank disclosed in a stock exchange filing that “certain aspects” identified in the review may warrant scrutiny under applicable insider trading laws. “The bank is examining these findings… and based on the outcome… will take the necessary steps under applicable law including the bank’s Insider Trading Code,” it said.
The independent review was conducted by audit and advisory firm Grant Thornton, which was appointed by IndusInd earlier this year to probe longstanding discrepancies in its internal derivative trades.
In March, the country’s fifth-largest private sector lender admitted that years of improper accounting of internal derivative transactions had caused a hole of around $230 million (approximately Rs1,900 crore) in its $60.8 billion balance sheet. The discrepancies, which went undetected over an extended period, triggered concerns around internal controls and prompted a comprehensive forensic audit.
Media reports indicated that the audit unearthed instances of share trading by senior executives, including CEO Sumant Kathpalia and then-deputy Arun Khurana, during periods when the accounting lapses had not yet been disclosed to the public.
Kathpalia, who tendered his resignation citing “moral responsibility”, and Khurana, who resigned citing “unfortunate developments”, have not publicly commented on the findings.
Meanwhile, ratings agency Moody’s revised its outlook on IndusInd Bank to ‘negative’ from ‘stable’, citing potential adverse effects on the bank’s solvency, liquidity, or access to funding.
