IndusInd Bank CEO Sumant Kathpalia resigned Tuesday, less than two months after discrepancies in the lender’s derivatives portfolio came to light and resulted in a nearly ₹1,960-crore write-down that would be reflected in its March-quarter earnings.
Kathpalia’s resignation comes less than 24 hours after his deputy, Arun Khurana, quit in the first top-level exit at the lender in the aftermath of the disclosure.
Kathpalia, in his resignation letter, took full moral responsibility for the lapses that have shaken the institution with a current market capitalization in excess of Rs 65,000 crore.
“I wish to submit my resignation from the services of the bank in relation to the ongoing derivatives discussions,” Kathpalia wrote. “I undertake moral responsibility, given the various acts of commission and omission that have been brought to my notice. I would request that my resignation be taken on record at the close of working hours today (Tuesday).”
The bank has sought approval from the Reserve Bank of India (RBI) to set up a committee of executives to discharge the duties, roles and responsibilities of the CEO for an interim period until a permanent CEO is appointed, the lender said in a statement to the exchanges.
Kathpalia’s resignation comes within 48 hours of Grant Thornton Bharat submitting its probe report that highlighted senior management deficiencies in the period through which accounting lapses continued and remained undetected.
This swift leadership shake-up follows IndusInd Bank’s announcement just days prior, signalling an intent to address the situation head-on by taking corrective action against the employees involved in the lapses and revamping its senior management structure to enhance accountability.
IndusInd Bank is under intense scrutiny due to a substantial Rs 1,959.98-crore loss linked to mis-accounted internal derivative trades. According to the bank, the losses were primarily the result of inaccurate accounting for internal derivative trades, particularly where contracts were terminated early. These errors led to inflated notional profits, concealing the true financial state of the derivatives portfolio over multiple reporting periods.
Kathpalia, who was appointed CEO on March 24, 2020, is a 60-year-old seasoned banking professional with a long tenure at IndusInd, having joined the bank in 2008. He is credited with expanding the bank’s consumer loan portfolio from the ground up, broadening the loan book beyond corporate clients, and diversifying the bank’s offerings to include products like loans against property, personal loans, and credit cards alongside the bank's traditional vehicle finance business.
Under his leadership, the bank's balance sheet expanded from Rs 4.24 lakh crore in March 2020 to Rs 5.43 lakh crore by December 2024. Kathpalia's career also includes leadership roles at ABN Amro, where he headed the consumer loans division before joining IndusInd. He is a chartered accountant with extensive experience, having worked at Bank of America and Citibank before transitioning to leadership roles at ABN Amro.
However, Kathpalia’s tenure was not without controversy. Under his leadership, IndusInd Bank faced several regulatory challenges. In December 2024, the RBI imposed a penalty on the bank for failing to adhere to deposit interest rate guidelines, while its investigation revealed that the bank had opened savings accounts for ineligible individuals.
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Kathpalia, in his resignation letter, took full moral responsibility for the lapses that have shaken the institution with a current market capitalization in excess of Rs 65,000 crore.
“I wish to submit my resignation from the services of the bank in relation to the ongoing derivatives discussions,” Kathpalia wrote. “I undertake moral responsibility, given the various acts of commission and omission that have been brought to my notice. I would request that my resignation be taken on record at the close of working hours today (Tuesday).”
The bank has sought approval from the Reserve Bank of India (RBI) to set up a committee of executives to discharge the duties, roles and responsibilities of the CEO for an interim period until a permanent CEO is appointed, the lender said in a statement to the exchanges.
Kathpalia’s resignation comes within 48 hours of Grant Thornton Bharat submitting its probe report that highlighted senior management deficiencies in the period through which accounting lapses continued and remained undetected.
This swift leadership shake-up follows IndusInd Bank’s announcement just days prior, signalling an intent to address the situation head-on by taking corrective action against the employees involved in the lapses and revamping its senior management structure to enhance accountability.
IndusInd Bank is under intense scrutiny due to a substantial Rs 1,959.98-crore loss linked to mis-accounted internal derivative trades. According to the bank, the losses were primarily the result of inaccurate accounting for internal derivative trades, particularly where contracts were terminated early. These errors led to inflated notional profits, concealing the true financial state of the derivatives portfolio over multiple reporting periods.
Kathpalia, who was appointed CEO on March 24, 2020, is a 60-year-old seasoned banking professional with a long tenure at IndusInd, having joined the bank in 2008. He is credited with expanding the bank’s consumer loan portfolio from the ground up, broadening the loan book beyond corporate clients, and diversifying the bank’s offerings to include products like loans against property, personal loans, and credit cards alongside the bank's traditional vehicle finance business.
Under his leadership, the bank's balance sheet expanded from Rs 4.24 lakh crore in March 2020 to Rs 5.43 lakh crore by December 2024. Kathpalia's career also includes leadership roles at ABN Amro, where he headed the consumer loans division before joining IndusInd. He is a chartered accountant with extensive experience, having worked at Bank of America and Citibank before transitioning to leadership roles at ABN Amro.
However, Kathpalia’s tenure was not without controversy. Under his leadership, IndusInd Bank faced several regulatory challenges. In December 2024, the RBI imposed a penalty on the bank for failing to adhere to deposit interest rate guidelines, while its investigation revealed that the bank had opened savings accounts for ineligible individuals.
