IndusInd Bank Crisis: RBI steps in, tells board to nominate external candidates for COO, CEO posts

IndusInd Bank News: Crisis ensued at India’s fifth largest bank after it disclosed discrepancies in account balances.

The Reserve Bank of India has told the board of crisis-hit IndusInd Bank to look for external candidates for the post of COO and CEO, an Economic Times report said on Thursday.

The development comes a day after the central bank launched a sector-wide assessment of the derivative positions. According to the ET report, the RBI has told the bank board to nominate two candidates for the top position who are not part of the financial institution.

It should be noted that last week, the RBI had given nod to a year-long extension to the reappointment of current chief executive officer Sumant Kathpalia.

His term was originally supposed to end on March 24 this year. However, after the extension, Kathapalia’s term will now end in March next year. So far, there ahs been no official announcement by either RBI or IndusInd bank on the nomination of the external candidates.

Previously, in an analyst call, Kathapalia had said that the central bank may have some concerns regarding his leadership skills.

On being given just a year of extension, the current IndusInd CEO had said that the RBI was ‘uncomfortable’ with his style of working.

Crisis ensued at India’s fifth largest bank after it disclosed discrepancies in account balances. In a statement on Monday, the bank had said that an internal review was on to assess the position of derivative portfolio. The bank had said that this could lead to 2.35% hit to its net worth.

A day later, on March 11, the stocks of IndusInd Bank plummeted 27 percent. Meanwhile, brokerage firm CLSA has given an 'Outperform' tag to IndusInd Bank. However, it has lowered the price target from to Rs 900 apiece.