How IndusInd Bank Spotted a ₹600-cr Error in Microloans

IndusInd Bank's statutory auditors were reviewing the lender's latest quarterly numbers when they noticed something amiss: the bank had bunched interest income from many microfinance loans together, instead of making individual entries for them. The auditors flagged the matter to the lender, uncovering a ₹600 crore discrepancy, three people aware of the matter said.

- Shayan Ghosh & Devina Sengupta

On 22 April, the bank said its internal audit department is reviewing its microfinance business to "examine certain concerns which have been brought to the bank's attention". IndusInd said it had appointed Big Four auditor EY to assist in reviewing these records.

"When auditors looked at the documents, they realized that these were shown as just a handful of accounts instead of separate entries for every loan. The interest rates also seemed to be ad hoc ones and not for individual borrowers," one of the three people said.

Banks book interest income from borrowers individually, since they charge different rates to different people, and the interest received from them differs as well.