IndusInd Bank CEO Sumant Kathpalia Resigns Amid Derivatives Accounting Discrepancies
IndusInd Bank CEO Sumant Kathpalia resigned with immediate effect following accounting lapses in the lender's derivatives portfolio that led to a ₹1,960 crore financial impact.
Key Highlights:
IndusInd Bank CEO Sumant Kathpalia Resigns Amid Derivatives Accounting Discrepancies
IndusInd Bank’s Managing Director and CEO, Sumant Kathpalia, resigned on April 29, 2025, with immediate effect, amid revelations of serious derivatives accounting discrepancies that led to significant financial impacts on the lender’s books.
The resignation marks a major leadership shake-up at the private sector bank, which is grappling with a cumulative accounting impact estimated at ₹1,960 crore for FY2025.
Details of the Resignation
Kathpalia’s resignation was formally communicated to the stock exchanges, with the letter citing “moral responsibility” for acts of omission and commission that led to the accounting irregularities.
In his resignation letter, Kathpalia stated:
“I undertake moral responsibility, given the various acts of commission/ omission that have been brought to my notice. I thank the Regulators, Board, Management Team, and staff for their support during my 5-year tenure as CEO.”
His resignation follows the earlier departure of Deputy CEO Arun Khurana.
Background of the Accounting Lapses
The discrepancies arose from incorrect accounting of internal derivative trades, particularly in the early termination of contracts, resulting in the recording of notional profits.
A bank-appointed external auditor reported that the discrepancies led to a ₹1,959.98 crore adverse impact on the bank’s profit and loss account as of March 31, 2025.
The estimated net worth impact post-tax stood at 2.27% as of December 2024.
The bank had earlier disclosed that it discontinued internal derivative trades from April 1, 2024, to tighten internal controls.
Interim Leadership Arrangements
Pending the appointment of a permanent CEO, IndusInd Bank’s board has sought Reserve Bank of India (RBI) approval to constitute a Committee of Executives to oversee CEO functions temporarily.
This interim structure aims to ensure business continuity and restore stakeholder confidence.
Share Price Movement and Market Reaction
Despite the leadership turmoil, IndusInd Bank shares closed 0.84% higher at ₹837.50 on the NSE on Tuesday.
Analysts believe the quick management action may help contain the fallout if corrective measures are implemented swiftly.
What Lies Ahead
IndusInd Bank faces a challenging period ahead, balancing the need to strengthen corporate governance while maintaining growth momentum.
The appointment of a new CEO and further internal reforms will be critical for restoring investor confidence and regulatory trust.
The bank is expected to reflect the full impact of the accounting lapses in its FY2025 financial statements.
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