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    IndusInd Bank derivatives scandal: Key dealer’s sudden exit under cops’ scanner

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    By Shilpy Sinha

    Copyright indiatimes

    IndusInd Bank derivatives scandal: Key dealer’s sudden exit under cops' scanner

    Police probe role of Gondane who left India after his resignation

    Mumbai: The Mumbai Police probing the alleged accounting irregularities at IndusInd Bank is looking into what triggered the hurried exit of a key dealer, and whether his departure is linked to malpractices that caused a record quarterly loss at the private lender.Pushkar Gondane, a senior dealer at IndusInd Bank, was at the centre of controversial derivative trades that triggered an ongoing investigation, executives questioned by the Economic Offences Wing told ET. He quit in December 2024, just before the probe intensified, and later moved abroad.To be sure, Gondane hasn’t been summoned by the Mumbai Police so far.Accounting LapsesThe allegations of his untimely exit have surfaced in the statements made by former IndusInd Bank executives questioned by the city police over the past one week.The Hinduja-promoted lender made formal disclosure on the accounting gaps early March this year.Live EventsGondane had been with IndusInd since 2012, joining its global markets group before rising to the level of a vice president to head FX and derivatives trading in July 2020.He reported directly to Siddharth Banerjee, executive vice president, the former executive has reportedly told the police.Investigators have been told by senior executives that Gondane was the key dealer for the trades now under scrutiny and should have been a central figure in the probe.“These are claims made by one of the three former senior executives questioned during the course of the preliminary enquiries,” said a person privy to the investigation. “Whether this is actually linked to the case or it is just an alibi or a ploy to divert attention by those quizzed is being examined.”More than a dozen suspended employees from the finance and accounts divisions have given statements to the Mumbai Police, besides former CFO Govind Jain, ex-CEO Sumant Kathpalia, and former deputy CEO Arun Khurana.Preliminary enquiryThe Mumbai Police’s EOW began a preliminary enquiry in August after IndusInd filed a complaint flagging suspected accounting irregularities, some of which the bank believes may date back as far as 2015.An IndusInd Bank spokesperson told ET that since the matter is under investigation by the EOW, it would not be appropriate for the bank to respond to this report based on statements allegedly made by persons who are under investigation.Gondane was not immediately available for a comment.To be sure, the case is still at an inquiry stage and a call to convert the preliminary enquiry into a formal first information report (FIR) will depend on the conclusion of the inquiry. An FIR will follow only if the preliminary enquiries justify a further probe.“We have received all the data required and this is being examined before arriving at a conclusion,” the official added.The alleged irregularities arose from unhedged yen contracts where internal trades between IndusInd’s dollar and yen desks were booked on an accrual basis, while the external trades were marked to market. This mismatch inflated profits in earlier years and delayed loss recognition, leaving the bank with nearly ₹2,000 crore in losses that were booked in one quarter after formal disclosures were made to stock exchanges.Internal audit reportsMoreover, ex-CFO Jain, who signed PwC’s engagement letter before quitting, told authorities that two internal audit reports for FY23 and FY24 overlooked discrepancies he and his predecessor, former CFO SV Zaregaonkar, had earlier flagged.PwC’s review, launched in July 2024, examined the Calypso trading system and desk-to-desk transactions, and questioned treasury staff, including Gondane.The private lender said in March that its internal review of derivative-related accounts indicated a likely hit of about 2.35% to its net worth as of December 2024.IndusInd disclosed a Rs 1,979-crore lapse in its derivatives portfolio, alongside additional misstatements of Rs 674 crore booked as microfinance income, Rs 595 crore in “unsubstantiated balances” under other assets, and Rs 172.6 crore misclassified as fee income.After these disclosures, Grant Thornton was brought in to examine individual culpability. Its report, submitted recently, named around 25 people linked to the lapses, according to people aware of the findings.Add as a Reliable and Trusted News Source Add Now!
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