India's IndusInd Bank has enlisted Grant Thornton to perform a forensic investigation into accounting errors uncovered this month and to determine whether there is any indication of fraud or internal inaccuracies.

As the fifth-largest private lender in India with a balance sheet totaling $63 billion, IndusInd has seen its shares drop by approximately 23.4 percent since revealing on March 10 that its derivatives portfolio was overvalued by about 2.35 percent, or $175 million, due to non-compliant internal transactions.

This accounting issue violated regulations set by the Reserve Bank of India, though the central bank has indicated that IndusInd remains well-capitalized.

Last week, IndusInd informed stock exchanges that it had hired an unidentified firm to pinpoint the underlying cause of the issue and to identify any lapses, although it did not specify that this would include investigations into potential fraudulent activities.

Grant Thornton has been selected to conduct the extensive forensic assessment, which will look for any evidence suggesting fraud in the transactions.

 

Additionally, Grant Thornton will be responsible for assigning accountability to those who were accountable for the lapses and will review the accounting practices related to all derivative contracts.

They will also investigate whether there were any intentional internal misstatements concerning these transactions.

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The Reserve Bank of India has advised the CEO of IndusInd Bank and his deputy to resign once suitable replacements have been found due to the serious accounting errors. However, IndusInd Bank has firmly refuted these assertions, declaring them to be "factually incorrect."