IndusInd Bank CEO Kathpalia Quits Due To Derivatives Accounting Lapse

New Delhi: IndusInd Bank introduced on Tuesday that its Managing Director and CEO Sumant Kathpalia has resigned from his submit in connections with the derivatives accounting lapse that has eroded the personal sector financial institution’s internet price. 

The building comes an afternoon after Deputy CEO Arun Khurana surrender after accounting discrepancies have been unearthed within the financial institution’s derivatives portfolio by means of an impartial audit. The findings of the investigation performed by means of a certified company, appointed by means of the financial institution’s board, have been submitted on April 26. The audit document showed that unsuitable accounting practices resulted in an adversarial cumulative have an effect on of Rs 1,959.98 crore at the financial institution’s benefit and loss account as of March 31, 2025.

“I wish to submit my resignation from the services of the Bank in relation to the ongoing Derivatives discussion. I undertake moral responsibility, given the various acts of commission/ omission that have been brought to my notice. I would request that my resignation be taken on record at close of working hours today,” Kathpalia mentioned in his resignation letter.

The factor first got here to mild on March 10, when IndusInd Bank disclosed that mark-to-market (MTM) losses in its derivatives ebook may have an effect on as much as 2.35 in line with cent of its internet price as of December 2024 because of discrepancies in its by-product accounts discovered all through an inside assessment. The loss in internet price labored out to round Rs 1,600 crore.

The RBI issued a route to the financial institution to nominate international audit company Grant Thornton Bharat to habits a forensic investigation to verify a correct overview of the losses. According to the Grant Thornton investigation, unsuitable accounting of inside by-product trades by means of the financial institution, in particular within the circumstances of early termination, resulted in notional earnings, which ended in accounting discrepancies.

The financial institution additionally sought approval from India’s central financial institution to arrange a committee of executives who will take fee of the CEO’s obligations. Earlier, the Reserve Bank of India (RBI) had determined in March to grant just a one-year extension to his tenure, in spite of the financial institution’s request for a three-year time period. The RBI determination to chop brief his tenure on the time used to be made because of issues over governance and monetary reporting problems with IndusInd Bank.

IndusInd Bank had mentioned the online price have an effect on emerged from inside by-product trades, which have been no longer in compliance with regulations enforced by means of the RBI from April 2024. The RBI had modified the foundations that govern the funding portfolio of business banks in September 2023.