RBI approves committee to oversee IndusInd Bank after resignation of CEO Sumant Kathpalia on discrepancies in derivatives portfolio

IndusInd Bank's CEO Sumant Kathpalia tendered his resignation on Wednesday — a day after the bank's deputy CEO Arun Khurana resigned with immediate effect.

IndusInd Bank informed the exchanges on Wednesday that the Reserve Bank of India (RBI) has formally approved the establishment of a "Committee of Executives" to oversee operations during the leadership transition period. This comes amid continued outrage over accounting lapses in the bank's derivatives portfolio.

As per the exchange filing, the newly formed committee will comprise two senior leaders — Soumitra Sen, who currently heads the Consumer Banking division, and Anil Rao, the bank's Chief Administrative Officer.

Also Read: IndusInd Bank CEO Sumant Kathpalia resigns with immediate effect

Soumitra Sen, the current Head of Consumer Banking & Marketing at the bank, is a Columbia Business School alumnus. He began his career with Nestle for 5 years before shifting to retail banking. His first stint in the banking sector was at Bank of America in 1994 and thereafter he worked with Deutsche Bank AG, ABN AMRO Bank NV & RBS. He joined IndusInd Bank in 2008.

Anil Rao, an MBA and an alumnus of IIT Delhi, also began his journey in the banking sector with the Bank of America, followed by stints at ABN AMRO Bank and Royal Bank of Scotland (RBS). At RBS, he managed branch banking and back-office operations for assets, liabilities and non-branch channels. He started his career in the sales and distribution division at an FMCG company, where he worked on the eastern and northern India markets.

Furthermore, the executive committee will function under the supervision of a specially constituted oversight committee of the bank's Board.

As per the filing, the Oversight Committee will be chaired by the Chairman of the IndusInd Board and comprise the chairs of Audit Committee, the Compensation and Nomination and Remuneration Committee and the Risk Management Committee, as members.

The interim arrangement will continue until either a permanent Managing Director and CEO assumes the position or for a maximum period of three months from the relieving date of the previous chief executive, whichever occurs first.

In its communication with stakeholders, IndusInd Bank emphasized its commitment to maintaining operational stability during this transition period, stating that it is "taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance."

CEO Sumant Kathpalia and deputy CEO Arun Khurana resign

IndusInd Bank's CEO Sumant Kathpalia tendered his resignation on Tuesday — a day after the bank's deputy CEO Arun Khurana resigned with immediate effect.

Kathpalia, a banker for close to 30 years, had been appointed CEO in March 2020. He had been a part of IndusInd Bank for over 12 years in different capacities. He had received a one-year extension from RBI right before the accounting discrepancies were revealed. In his resignation letter, Kathpalia said, "I undertake moral responsibility, given the various acts of commission/omission that have been brought to my notice."

Prior to his exit, Khurana, the deputy CEO and executive director of the bank, had resigned on Monday after the findings regarding accounting lapses in the bank's derivatives portfolio were released. As per an exchange filing, in his resignation letter Khurana 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."