IndusInd Bank's top executive steps down from position.
It's a stormy time at IndusInd Bank as their top executive, MD and CEO Sumant Kathpalia, has resigned, effective immediately. He's shouldering the moral burden for accounting oddities discovered within the bank's derivatives portfolio. The fallout from these financial fumbles? A whopping Rs 1,959.98 crore dent.
Kathpalia's resignation letter, sent to the stock exchanges, reads, "I hereby tender my resignation from the bank's service in relation to the ongoing derivatives debate. I take moral responsibility for the various acts of commission/ omission that have come to light."
You might be wondering why the drama? Well, after a thorough internal review, the bank found jumbled numbers in the derivatives department - specifically, internal trades prematurely terminated that led to recorded notional profits, causing a financial befuddlement.
With Khurana's departure the day before, this is the third high-ranking resignation at India's fifth-biggest private-sector bank in recent months. Prior to Kathpalia and Khurana, CFO Gobind Jain bid farewell in January.
Despite requests for a three-year term extension, the RBI only gave Kathpalia a one-year extension in March, causing a stir among investors. In March 2023, the RBI shortened his term from the suggested three years to two.
The board has requested the RBI's blessings to form an interim 'committee of executives' to manage the CEO's responsibilities until a permanent successor is found.
Curious about the next moves? The bank will integrate the Rs 1,960 crore impact into their FY2024-25 financial statements. They're also working on assigning accountability and re-aligning senior management roles. Internal derivative trades were halted as of April 1, 2024, with strengthened internal controls being implemented.
An independent investigation by Grant Thornton found a cumulative negative impact of ₹1,959.98 crore on the bank’s profit and loss account as of March 31, 2025.
A seasoned banker with over 37 years of experience, Kathpalia spent time at renowned multinational banks like Citibank, Bank of America, and ABN AMRO before joining IndusInd Bank. During his tenure, he focused on fortifying the balance sheet, expanding the liability franchise, diversifying the portfolio, and maintaining capital adequacy.
- Amid the accounting snafu at IndusInd Bank, their CEO, Sumant Kathpalia, who has extensive experience at banks like Citibank, Bank of America, and ABN AMRO, has resigned.
- Kathpalia's resignation letter, sent to the stock exchanges, mentioned his responsibility towards the ongoing debate over the bank's derivatives.
- The banking sector has been experiencing troubles at IndusInd, with internal reviews revealing jumbled numbers in the derivatives department, specifically prematurely terminated internal trades causing financial confusion.
- This is the third high-ranking resignation at India's fifth-biggest private-sector bank in recent months, following the departures of CFO Gobind Jain in January and a previous executive.
- The RBI only granted Kathpalia a one-year extension in March despite requests for a three-year term extension, causing commotion among investors.
- As a temporary measure, the bank is seeking the RBI's approval to form a committee of executives to manage the CEO's responsibilities while they search for a permanent successor. They also plan to assign accountability, re-align senior management roles, and integrate the Rs 1,960 crore impact into their FY2024-25 financial statements.
