Auditors of BFIL, IndusInd Bank's MFI Unit, Issue Qualified Audit Report for Fourth Consecutive Quarter
IndusInd Bank Provides Update on Bharat Financial Inclusion Ltd Audit Report
IndusInd Bank announced on April 24 that the auditors of Bharat Financial Inclusion Ltd (BFIL), the microfinance unit of the lender, have issued an audit report for Q4, regarding the accounting lapses reported in 2025. The audit report, dated April 21, stated that the bank had carried out an investigation, which was started in the previous quarter, and no further financial impact is expected for FY26.
The investigation was a result of the lender coming under scrutiny last year after disclosing multiple discrepancies, which led to a near Rs 2,000-crore hit in the year ended March 2025. This was due to mis-accounting of internal derivative trades, incorrect recognition of interest and fee income of Rs 846.40 crore linked to its microfinance portfolio, among others. The issues raised concerns over governance and led to the resignations of former CEO Sumant Kathpalia and deputy chief Arun Khurana. The current CEO, Rajiv Anand, was appointed by the board on August 25, 2025, for a three-year term.
A recent analysis revealed that BFIL's issues were much larger than the derivatives trading lapses. Provisioning for the microfinance business rose significantly to Rs 2,000 crore in Q4 FY25, while other adjustments were made within the profit and loss statement itself.
Read also: Motilal Oswal Maintains Buy Rating, Targets Delhivery at Rs 570
Key Statistics:
| Quarter | Loan Book (Rs crore) | YoY Change |
|---|---|---|
| Q4 FY25 | 30,909 | - |
| Q4 FY26 | 16,782 | -42% |
As of FY25, the microfinance unit had a 9 percent share of the bank's total loans, which dropped marginally to about 8 percent in the first quarter of FY26. The loan book of BFIL has been dropping sequentially in at least the last 5 quarters. In Q4 FY25, the loan book for BFIL stood at Rs 30,909 crore, which dropped to Rs 16,782 crore in Q4 FY26.
The lender reported a swing to a profit of Rs 533 crore for the March quarter, as compared to a loss of Rs 2,236 crore in the previous corresponding quarter. This was helped by a drop in provisioning for bad loans and improving asset quality.
Read also: Motilal Oswal Maintains Buy Rating on Infosys, Targets Rs 1450
Investor Takeaway
Investors should be cautious of potential accounting lapses in IndusInd Bank's microfinance unit.
More in Market
Motilal Oswal Maintains Buy Rating, Targets Delhivery at Rs 570
Motilal Oswal Maintains Buy Rating on Infosys, Targets Rs 1450
Motilal Oswal Initiates Coverage of LTM with a Buy Rating, Target Price of Rs 5400
