IndusInd Bank CEO Sumant Kathpalia resigns amid accounting scandal; 2nd top exit in 2 days

Just a day after its deputy chief executive officer (CEO), Arun Khurana, resigned, the private lender IndusInd Bank has announced the resignation of its MD & CEO, Sumant Kathpalia, with effect from today, marking the second high-profile exit amid the issue of accounting discrepancies related to internal derivative trades at the bank.

Taking "moral responsibility", Kathpalia, in his resignation, said that given the various acts of commission or omission brought to his notice, he requested the board of directors to accept his resignation. "I wish to submit my resignation from the services of the Bank in relation to the ongoing Derivatives discussion...I would like to thank the Regulators, Board, my Management Team members and staff for the support I got during my tenure of 5 years as the CEO," Kathpalia said.

IndusInd Bank , in an exchange filing, said its board has sought the approval of the Reserve Bank of India to constitute a “Committee of Executives”, to discharge the duties, roles and responsibilities of the CEO of the Bank for an interim period until a permanent CEO is appointed.

IndusInd Bank deputy CEO Arun Khurana, who resigned on April 28, 2025, in his resignation letter, also said that he would like to resign considering the recent unfortunate developments, wherein the bank found an adverse accounting impact on P&L, on account of incorrect accounting for internal derivative trades.

These sudden departures from the banking major come as it deals with the financial implications of the accounting matter. These unexpected resignations have fuelled concerns regarding the bank's internal controls and financial reporting integrity.

Before Khurana and Kathpalia, IndusInd CFO Gobind Jain had also exited the bank on January 17, 2024, just before the announcement of the December quarter results.

In a stunning revelation, on March 10, 2025, IndusInd announced that it had identified discrepancies in the accounting of derivative transactions conducted over the past 5-7 years for hedging its foreign currency borrowings. It admitted to significant discrepancies in its derivative portfolio, resulting in an estimated adverse impact of 2.35% on its net worth. The estimated loss was around ₹1,529.90 crore, based on the bank’s net worth of ₹65,102 crore as of December 2024. The bank had clocked a profit of ₹6,628 crore during the nine months of the current fiscal year.

The private sector lender's board has, meanwhile, appointed an independent professional firm to conduct a comprehensive investigation to identify the root cause of the discrepancies, assess the correctness and impact of the accounting treatment of the derivative contracts. The investigation aims to identify any lapses and establish accountability.

IndusInd Bank shares closed 0.82% up at Rs 837.30 on the BSE.