IndusInd Bank appoints firm to investigate root cause of accounting discrepancies

New Delhi: IndusInd Bank has appointed a professional firm to conduct investigation for identifying the root cause of accounting discrepancies relating to its derivatives portfolio.

As per an estimate, Rs 2,100 crore discrepancy in accounting may impact 2.35 per cent of the Bank's net worth.

The board of directors at its meeting held on Thursday, decided to appoint an independent professional firm to conduct a comprehensive investigation to identify the root cause of the discrepancies, assess the correctness and impact of the accounting treatment of the derivative contracts with regard to the prevailing accounting standards, the bank said in a regulatory filing.

Besides, the firm would identify any lapses and establish accountability with regard to discrepancies in accounting.

The bank on March 10, had disclosed the ongoing review by an external agency, of certain discrepancies identified by the lender, in its account balances relating to its derivatives portfolio.

Meanwhile, Moody's has placed the IndusInd Bank's baseline credit assessment (BCA) under review for a possible downgrade following the disclosure.

Moody's placed IndusInd's Ba1 Baseline Credit Assessment (BCA) and adjusted BCA under review for downgrade.

Baseline credit assessments are based on the entity's standalone financial health, without considering any support it might get from related companies.

Earlier this week, IIHL chairman Ashok Hinduja said IndusInd Bank has not sought any fresh capital from its promoters even though it suffered a huge loss in its net worth following an accounting discrepancy.

IIHL, the investment arm of Hinduja Group, has recently got RBI's in-principle approval to raise its stake in IndusInd Bank from 16 per cent to 26 per cent.

According to Hinduja, IndusInd International Holdings Ltd (IIHL) - the Mauritius-based promoters of the private sector lender - has committed to infuse capital into the bank in case there is a requirement.