IndusInd Bank constitutes committee of executives to run bank following CEO's resignation

New Delhi: IndusInd Bank on Wednesday said its board has appointed a 'committee of executives' to oversee the operations of the bank following resignation of CEO Sumant Kathpalia.

Kathpalia resigned from services of the bank with effect from April 29, 2025, taking moral responsibility of accounting lapses in the derivatives portfolio having financial implication of Rs 1,960 crore.

"The Board has constituted such “Committee of Executives” to oversee the operations of the bank, under the oversight and guidance of the Oversight Committee of the Board till a new MD&CEO...assumes charge or a period of 3 months," IndusInd Bank said in a regulatory filing.

The oversight committee shall be chaired by the chairman of the board and shall comprise the chairs of Audit Committee, the Compensation and Nomination & Remuneration Committee and the Risk Management Committee, as members, it said.

The board has constituted Committee of Executives after an approval from RBI.

The bank is taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance, it added.

Earlier this week, IndusInd Bank had informed bourses that a bank-appointed external auditor has determined a cumulative adverse accounting impact on profit and loss at Rs 1,959.98 crore as on March 31, which is almost 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 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.