SOURCE : NEW18 NEWS
Last Updated:April 29, 2025, 20:56 IST
This comes a day after the bank’s Deputy CEO Arun Khurana had tendered his resignation on Monday
Kathpalia, Managing Director & CEO, has by his letter dated April 29, 2025, resigned from services of the bank with effect from close of working hours on April 29, 2025, IndusInd Bank said in a regulatory filing.
IndusInd Bank MD and CEO Sumant Kathpalia on Tuesday resigned with immediate effect, taking moral responsibility of accounting lapses in the derivatives portfolio, having financial implication of Rs 1,960 crore to the bank.
This comes a day after the bank’s Deputy CEO Arun Khurana had tendered his resignation on Monday. Its Chief Financial Officer (CFO) Govind Jain had quit in January before the lapses came to light.
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Kathpalia, Managing Director & CEO, has by his letter dated April 29, 2025, resigned from services of the bank with effect from close of working hours on April 29, 2025, IndusInd Bank said in a regulatory filing.
“I undertake moral responsibility, given the various acts of commission/omission that have been brought to my notice. I would request that my resignation be taken on record at close of working hours today,” Kathpalia said in a resignation letter addressed to the board of the bank.
The board has sought approval of the Reserve Bank of India 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, as per the filing.
Earlier this week, the private sector lender had informed that a bank-appointed external auditor has determined a cumulative adverse accounting impact on profit & loss at Rs 1,959.98 crore as on March 31, which is similar to the amount disclosed on April 15.
On April 15, IndusInd Bank disclosed on the basis of a report of another external agency that accounting lapses in the derivative portfolio will have a negative impact of Rs 1,979 crore on its net worth.
The bank has assessed an adverse impact (on a post-tax basis) of 2.27 per cent to its net worth as of December 2024 on account of discrepancies relating to derivative deals.
The private sector lender reported last month the accounting lapses in the derivative portfolio, estimated to have an adverse impact of approximately 2.35 per cent of the bank’s net worth as of December 2024.
The developments follow an independent investigation by a professional firm appointed by the bank’s board on March 20, 2025.
The report submitted on Sunday identified 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 report also examined the roles and actions of key employees in this context, IndusInd Bank had disclosed, saying that the board is taking necessary steps to fix accountability of the persons responsible for these lapses and re-align roles and responsibilities of the senior management.
The discrepancies mainly arose from incorrect accounting of internal derivative trades, particularly in cases involving early termination. These mistakes resulted in the recording of notional profits and distorted the bank’s financials.
As a preventive step, the bank had already discontinued all internal derivative trading from April 1, 2024 in line with the RBI guidelines.
The bank is likely to post loss or heavy decline in net profit during the fourth quarter of the 2024-25 on account of in its derivatives portfolio. The bank has not disclosed the date for announcing its quarterly results.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)
