New Delhi: The Reserve Bank of India (RBI) has approved the constitution of an interim committee to oversee the operations of IndusInd Bank, which will discharge the duties, roles and responsibilities of the chief executive officer (CEO) of the bank for an interim period until a permanent CEO is appointed, the bank said Wednesday.
The move comes after IndusInd Bank’s Managing Director and CEO Sumant Kathpalia resigned from his post in connections with the derivatives accounting lapse that has eroded the private sector bank’s net worth.
In a stock exchange filing, the bank informed that the committee, comprising Soumitra Sen (Head–Consumer Banking) and Anil Rao (Chief Administrative Officer), will manage the bank’s day-to-day affairs under the supervision of an Oversight Committee of the Board.
This Oversight Committee will be chaired by the Chairman of the Board and will include the chairs of the Audit Committee, the Compensation and Nomination and Remuneration Committee, and the Risk Management Committee.
“Based on the RBI approval, 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 and CEO of the Bank assumes charge or a period of 3 months from the date of relieving the incumbent MD and CEO, whichever is earlier,” according to the exchange filing by the bank.
The bank said it is taking all necessary steps to ensure stability and continuity of its operations while “maintaining high standards of governance”.
The stock of IndusInd Bank fell in the early trade Wednesday.
The bank’s Deputy CEO Arun Khurana has also quit after accounting discrepancies were unearthed in the bank’s derivatives portfolio by an independent audit.
The findings of the investigation carried out by a professional firm, appointed by the bank’s board, were submitted April 26. The audit report confirmed that incorrect accounting practices led to an adverse cumulative impact of Rs 1,959.98 crore on the bank’s profit and loss account as of March 31, 2025.
The issue first came to light March 10, when IndusInd Bank disclosed that mark-to-market (MTM) losses in its derivatives book could impact up to 2.35 per cent of its net worth as of December 2024 due to discrepancies in its derivative accounts found during an internal review. The loss in net worth worked out to around Rs 1,600 crore.
The RBI issued a direction to the bank to appoint global audit firm Grant Thornton Bharat to conduct a forensic investigation to ensure an accurate assessment of the losses.
According to the Grant Thornton investigation, incorrect accounting of internal derivative trades by the bank, particularly in the cases of early termination, led to notional profits, which resulted in accounting discrepancies.
IANS
