(Reuters) -Japanese investment bank Nomura Holdings is investigating its India fixed-income business to determine whether profits were inflated in recent years, Bloomberg News reported on Monday, citing people familiar with the matter.
The investigation is focused on how the company valued trades in STRIPS, the report said. Nomura's compliance unit started scrutinizing the valuation and accounting practices of its local primary dealership about a month ago, according to the report.
Nomura declined to comment.
STRIPS, or separate trading of registered interest and principal of securities, allows dealers to sell principal and interest payments independently.
In June, India's central bank permitted STRIPS trade for state government bonds.
Nomura's investigation highlights concerns about STRIPS, which has become a hotspot for accounting practices that overstate reported gains, Bloomberg report said.
(Reporting by Komal Salecha in Bengaluru; Editing by Eileen Soreng)
