IndusInd Bank Sets Up Executive Committee After CEO Resigns Over ₹1,960 Crore Accounting Irregularity
In a significant development, IndusInd Bank has announced the formation of an executive committee to oversee its day-to-day operations following the resignation of its Managing Director and CEO, Sumant Kathpalia. The decision was disclosed in a regulatory filing on Wednesday.
Temporary Oversight Committee Formed
The bank’s Board of Directors approved the formation of the committee, which will function until a new MD & CEO assumes charge or for a period of three months, whichever is earlier. The committee will be chaired by the Board Chairman, and will include heads of key committees such as Audit, Risk Management, Compensation, and Nomination & Remuneration.
This step was taken following approval from the Reserve Bank of India (RBI) to ensure operational stability and continuity during the transition.
CEO Resigned Over Financial Misstatement
Sumant Kathpalia submitted his resignation effective April 29, 2025, taking moral responsibility for a ₹1,960 crore discrepancy related to accounting lapses in the bank’s derivatives portfolio. The issue came to light through internal reviews and was later confirmed by external auditors.
The auditors found an adverse impact of ₹1,959.98 crore on the bank’s profit and loss account as of March 31, 2025, nearly identical to the estimate provided by the bank on April 15.
Derivative Deal Misreporting Identified
Earlier, IndusInd Bank revealed that an independent external agency had uncovered accounting lapses in the handling of certain derivative deals. These mistakes were projected to impact the bank’s net worth by ₹1,979 crore, equivalent to a 2.27% negative effect post-tax as of December 2024.
The root of the issue was traced to prematurely terminated derivative transactions, where hypothetical gains were incorrectly recorded in the accounts.
Accountability and Structural Reforms Underway
The bank clarified that it is taking all necessary measures to ensure governance, operational continuity, and accountability. It has already begun assessing the role of key employees involved in the lapses and is in the process of recalibrating the responsibilities of top management.
The developments follow an independent investigation commissioned by the bank’s board on March 20, 2025, which highlighted internal accounting discrepancies in derivative trades.
