IndusInd Bank announced the resignation of deputy CEO Arun Khurana on Monday — weeks after the private lender disclosed accounting lapses in its derivatives portfolio. The bank has seen shares fall nearly 8% since March 10 after it first revealed the impact on its net worth from accounting discrepancies. According to a regulatory filing the exit went into immediate effect from April 28.
“Considering the recent unfortunate developments, wherein the Bank determined an adverse accounting impact on P&L, on account of incorrect accounting for internal derivative trades, I having oversight of the Treasury Front office function, as the Whole Time Director, Deputy CEO and a part of Senior Management of the bank, hereby resign, effective immediately,” Khurana wrote in a letter to IndusInd Bank’s board that was included in the stock market filing.
The announcement comes mere months after former CFO Gobind Jain stepped down citing personal reasons. Khurana had taken over the role in late January alongside his additional duties as executive director and Deputy CEO. The bank also named Santosh Kumar as its deputy CFO last week. He will head the finance and accounts functions till IndusInd appoints a full-time CFO.
The country’s fifth-largest private lender (with a balance sheet of $63 million) indicated on Sunday that it would take a $229.56 million hit to its accounts for the recently concluded financial year due to incorrect treatment of derivatives going back several years.
An external audit by independent professional firm Grant Thornton indicated that the bank was now facing a 2.27% hit to its net worth. The report submitted on Saturday assessed that the total impact on the profit and loss account at Rs 1,959.98 crore as of March 31 — broadly in line with the amount disclosed on April 15.
“The report identifies incorrect accounting of internal derivative trades, especially in case of early termination, which resulted in recording of notional profits, as the principal root cause for accounting discrepancy,” said the bank in a filing with the stock exchanges.