IndusInd Bank's $175M Balance-sheet Crisis

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Indian derivative accounting practices

Reuters

•

World

How Indian bank IndusInd's push for profits and lax controls drove it to a crisis

Summary

Nutrition label

80% Informative

IndusInd Bank ignored established Indian derivative accounting practices for years as it chased profit growth, sources say.

The bank converted foreign currency deposits into rupees to fund its loan growth in a highly competitive Indian banking sector.

The internal trades were not being marked-to-market, meaning they reflected real-time market movements and were mostly profitable for the bank.

A sharp fall in the rupee made the financial hit to the balance sheet untenable and led to the bank's disclosure, three of the sources said.

The Hinduja family has said it stands ready to infuse capital into the bank.

But investigations into the accounting lapses at IndusInd have now been widened, with accounting and consulting firm Grant Thornton doing a wider audit.

VR Score

Informative language

Neutral language

Article tone

formal

Language

English

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not offensive

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not hateful