IndusInd Bank CEO resigns taking ‘moral responsibility for acts of commission or omission’

IndusInd Bank CEO resigns after accounting errors, amid controversy over derivative trades and stock offloading by top management.

Chief Executive Officer of IndusInd Bank Sumant Kathpalia on Tuesday announced his resignation in a letter to shareholders, a day after the bank’s deputy CEO Arun Khurana stepped down.

The bank had earlier announced action against senior management for accounting errors in derivative trades.

“I wish to submit my resignation from the services of the bank in relation to the ongoing derivatives discussion. 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. 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,” Mr. Kathpalia said in the letter, which was part of an exchange filing announcing the management change on Tuesday.

Mr. Kathpalia had been with IndusInd Bank for over 17 years and took over as the CEO in March 2020. His tenure extension was approved by the RBI twice albeit for a shorter period.

The bank’s board approved an extension for three years, which was cut short to two years by the Reserve Bank of India. When his term came to an end in March 2025, the board sort another extension for three years until March 2028. The RBI, however, approved the second extension for just one year, until March 2026 . Days after this, on March 11, the bank announced an accounting error in the derivate trade department that would cost 2.35% of its networth. This figure turned out to be ₹1,530 crore which was later confirmed in an independent audit report on April 27.  Mr. Kathpalia was also reportedly considered close to the promoters of the bank, the Hinduja Group.

He had offloaded about 9.5 lakh shares amounting to a total value of ₹134 crore between May 2023 and June 2024. In the same period Mr. Khurana had offloaded about ₹80 crore worth of shares, as revealed in exchange filings. The bank’s stocks slid about 27.3% to ₹1,460 during the period.