Private sector lender IndusInd Bank’s CEO and MD Sumant Kathpalia has resigned with immediate effect. The resignation comes at a time when the lender has been in the news for accounting lapses in the derivatives portfolio.
In a letter to the bank’s board, Kathpalia acknowledged that his resignation was related to the issue. “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 the close of working hours today,” he said in his letter.
In March this year, IndusInd Bank had warned it had found discrepancies during an internal process review related to its derivatives portfolio and that this would hit its net worth. The internal review by the bank had initially estimated an adverse impact of approximately 2.35 per cent of the net worth as of December 2024. It had also roped in PwC to conduct an independent review.
The report submitted by PwC earlier this month quantified the negative impact as of June 30, 2024, at Rs 1,979 crore. Based on the report, the bank assessed an adverse impact (on a post-tax basis) of 2.27 per cent to the net worth as of December 2024.
Meanwhile, post Kathpalia’s resignation, IndusInd Bank’s board has sought approval from the Reserve Bank to constitute a committee of executives to discharge the duties and responsibilities of the CEO for an interim period until a permanent CEO is appointed.
Following the derivatives portfolio discrepancies disclosed by the bank, RBI issued an official statement stating the financial position of IndusInd Bank was satisfactory.
Earlier the regulator had approved only a one-year extension to Kathpalia as MD and CEO, even as the bank had requested a three-year term.