IndusInd Bank CEO and Managing Director Sumant Kathpalia has resigned from his role, the lender announced on April 29. His resignation will be effective from the close of the working hours of April 29.
"I undertake moral responsibility, given the various acts of commission/ omission that have been brought to my notice," Kathpalia said in his resignation letter. This comes after RBI granted only a one-year extension to Kathpalia's tenure as the bank's CEO, despite the lender asking for a three-year term.
IndusInd Bank sought RBI's approval to constitute a committee of executives to discharge the duties, roles and responsibilities of the Chief Executive Officer (CEO) of the Bank, for an interim period until a permanent CEO is appointed by the bank.
Kathpalia acknowledged that his resignation was in relation to the ongoing row over discrepancies in the bank’s derivatives portfolio. IndusInd Bank had earlier announced that there were certain accounting lapses in the derivative portfolio which could have a negative impact of 2.35 percent of the bank’s net worth, as of December 2024.
This sent the shares of the lender to a tail spin, with the stock falling 26 percent in a single day and wiping off major sums of investors' wealth. However, external auditor PwC later estimated the discrepancies to have a negative impact of Rs 1,979 crore on the bank’s net worth. The bank accordingly assessed an adverse impact of 2.27 per cent to its net worth as of December 2024.
The RBI later issued a statement, saying that IndusInd Bank remains "well-capitalised and the financially position remains satisfactory". Recently, RBI Governor Sanjay Malhotra said India's banking system remains "safe and secure" and described IndusInd Bank's accounting lapses and restrictions on New India Cooperative Bank as "episodes" and not "failures".
The bank also engaged Grant Thorton to conduct a forensic review into the accounting lapses. The report submitted on April 26, 2025, said that "incorrect accounting of internal derivative trades, especially in case of early termination, which resulted in recording of notional profits, as the principal root cause for accounting discrepancy".
The Board is taking necessary steps to realign the roles and responsibilities of senior management in trying to fix accountability for the lapses.
Notably, Kathpalia's resignation comes a day after the bank's deputy CEO Arun Khurana resigned with immediate effect. Khurana, in his resignation letter, wrote, "Considering the recent unfortunate developments, wherein the Bank determined an adverse accounting impact on P&L, on account of incorrect accounting for internal derivative trades, I having oversight of the Treasury Front office function, as the Whole Time Director, Deputy CEO and a part of senior management of the bank, hereby resign, effective immediately."
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