MUMBAI: Audit firm PwC, appointed by the accounting crisis-hit IndusInd Bank to probe the discrepancies in its forex derivatives portfolio, is likely to submit its report to the board of the bank by the weekend.
According to internal estimate, the bank is likely to book a Rs 2,100 crore loss in its forex derivatives book, as it has not been accounting the book for the past seven odd years. The bank, after being asked by the Reserve Bank of India, the banking regulator, has not yet disclosed how much would be the loss, except saying that it will have an impact of 2.35% of its networth.
which as of December 2024 was around Rs 64,000 crore.The regulator had asked the bank to book the losses in the ongoing quarter itself. PwC is expected to detail the actual loss due to accounting discrepancies in the forex derivatives book, and apportion blame to people at various levels and also suggest remedies, two sources told The New Indian Express.
Meanwhile, the board has also hired Grant Thornton to conduct a forensic audit into the accounting lapses. The auditing firm is asked comprehensively investigate and identify the root cause of the discrepancies and assess the correctness and the impact of the accounting treatment of the derivative contracts with regard to the prevailing accounting standards.
The bank had on March 10 disclosed certain discrepancies in its account balances relating to its forex derivatives portfolio. This was done after the bank was asked to do so by the regulator. Days after the disclosure, rating agency Moody's had placed bank’s baseline credit assessment under review for a possible downgrade following the disclosure.
This came after the shares of the bank was battered losing as much as 27.6% on a single day. Though the promoters the same day had offered to infuse capital, one week after the incident, they said they are waiting for the final RBI approval to increase the stake from the present 15%, held by IndusInd International Holdings (IIHL), to 26% but stopped short of committing immediate capital in to the bank.
Last week, the Mauritius-based promoters IIHL chairman Ashok Hinduja had said the bank had not sought any fresh capital from the promoters even though it suffered a huge loss in its net worth following an accounting discrepancy. Hinduja had also said he was expecting the PwC report by the weekend.
Sources had last week said the RBI had reportedly asked the bank management to replace both the chief executive Sumant Kathpalia and his deputy Arun Khurana as soon as possible. The regulator had also reportedly asked the board to appoint only outsiders for the top jobs, though the bank had denied any such development.