The India Institute of Certified Accountants (ICAI) is likely to review industry books after the accounting differences reported by the bank in its portfolio of derivatives earlier this week. ICA Presidents, the Singa Nanda, told the Economic Times: “As a proactive measure, the ICAIA Financial Reporting Board (FrRB) may consider the relevant financial reports of the Industry Bank.”
Nanda said that in case Frrb determines that the bank’s financial statements do not meet the standards needed to be “true and fair”, they have the authority to escalate the issue to the ICAIs Disciplinary Committee for potential action against the auditors involved.
On Monday, Indusind Bank announced that the differences in its derivative portfolio could result in a decrease of approximately 2.35% in its net value as of December 2024. The financial impact is estimated at about 1,600 crowns per tax and approximately 2,100 crowns before taxes.
These differences were discovered during the internal review of the bank’s processes regarding other assets and accounts of responsibility within its derivative portfolio. These transactions extended over seven to eight years to the end of the FY24.
Business today could not confirm the report with Izai.
The Indusand Bank tried to resolve concerns about Tuesday’s accounting mismatch, calming investors that it owns adequate reserves and capital to solve the problem. Despite this, the shares have fallen by approximately 30% of the publication, raising investors’ concerns.
The stocks of the industry bank were put under a short -term additional surveillance measure (ACM) – Phase 1 by NSE, as a result of a drop of nearly 30% of its market value. The decision was made on March 13.
Since Thursday, the stocks of the Industry Bank have closed the 672.65 Rs of NSE, reflecting a reduction of 12.05 Rs or 1.76%.
Stock rating
After the discovery, several brokers reduced the stock market rating and reduced the target prices as a result of an accounting error in the bank’s foreign currency portfolio. This resulted in a potential impact after a tax of 15.8 billion RS, which is 2.35% of the bank’s net value, raising concerns about the management and predictability of earnings.
The securities of the ICI have highlighted poor internal controls, saying the impact is expected to affect the statement of profit and loss, which potentially leads to loss in the fourth quarter of the fiscal year 2025.
It also reduced its rating of indusantine bank from “hold” to “reduction” and reduced the target price to 750 Rs as a result of the problems with credibility, resulting from various negative events, such as the resignation of the CF, the shortened extension of the executive director and the executive. The brokerage predicts challenges in progress.
Conversely, CLSA, a global brokerage company, took a different view, maintaining a “exceeded” rating and set a target of 900 Rs, which is 31% higher than the closing price of the previous day.
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