Just days after the Reserve Bank of India (RBI) denied a granted only a one-year extension instead of a three-year reappointment as requested, to Sumant Kathpalia, Managing Director and Chief Executive Officer (CEO), he said that the central bank is “not comfortable with my leadership skills” of running IndusInd Bank.
He said this during an analyst call on Monday, wherein he was addressing concerns about discrepancies found in the bank’s internal review of accounts related to its derivatives portfolio. In an exchange filing earlier the same day, the Bank also said that an internal review of its derivative portfolio revealed discrepancies, which could hit its net worth by approximately 2.35 per cent as of December 2024. With its net worth at Rs 65,102 crore as of December 31, the impact is likely to be around Rs 1,530 crore – more than Rs 1,401.3-crore net profit in the third quarter of FY25.
The filing further added, “The Bank has also, in parallel, appointed a reputed external agency to independently review and validate the internal findings. A final report of the external agency is awaited and basis which the Bank will appropriately consider any resultant impact in its financial statements.” IndusInd Bank said that its profitability and capital adequacy remain healthy enough to absorb this one-time impact.
During the analyst call, Sumant Kathpalia said the bank will take this hit through its profit-and-loss account, while adding that the banking firm would like to close it in the current quarter (Q4), if possible.
On Friday, in another filing, the Bank had informed that the RBI, vide its letter dated March 6, 2025, conveyed its approval for re-appointment of Sumant Kathpalia as MD & CEO of IndusInd Bank for a further period of one year with effect from March 24, 2025 till March 23, 2026. This was despite the Bank’s board requesting a three-year reappointment.
Sumant Kathpalia said, “This would have had a bearing as they were aware of the issue. I don’t know what the RBI’s rationale is to give me (a) one-year extension, but I think they are not comfortable with my leadership skills of running the bank, and we should respect that.”
He went on to add, “I don’t think the business-as-usual operations of the bank will suffer. I don’t think our growth agenda will go off track, and I remain committed for one year to the bank. Let’s see how the process goes. The board will evaluate both external and internal candidates for the CEO position.”