IndusInd Bank MD and CEO Sumant Kathpalia on Tuesday resigned with immediate effect, taking moral responsibility for the accounting discrepancies in the bank’s derivatives portfolio. His departure comes a day after deputy CEO Arun Khurana’s resignation, also with immediate effect.
“I wish to submit my resignation from the services of the bank in relation to the ongoing derivatives discussion,” Kathpalia said in his resignation letter sent to the stock exchanges. “I undertake moral responsibility, given the various acts of commission/ omission that have been brought to my notice,” he said.
The bank’s board has sought approval from the Reserve Bank of India (RBI) to form a ‘committee of executives’ to temporarily carry out the CEO’s duties and responsibilities until someone permanent is appointed.
IndusInd Bank had on Sunday announced that its board will take appropriate steps to fix accountability for the lapses and realign the roles and responsibilities of senior management.
Kathpalia’s resignation marks the third senior-level departure at India’s fifth-largest private sector bank in recent months. Before Kathpalia and Khurana, chief financial officer Gobind Jain had stepped down in January.
Kathpalia was appointed the CEO in March 2020. In March this year, the RBI approved only a one-year extension of his tenure despite the bank’s request for a three-year term—an unusual move that had raised concerns among investors. In March 2023, the RBI had also curtailed his term from the recommended three years to two.
The exits of key officials come after the bank announced accounting discrepancies in its derivative portfolio. The private lender, on March 10, had announced that an internal review of its derivatives portfolio revealed discrepancies that could hit its net worth by approximately 2.35% as of December 2024. The bank later hired a professional firm to thoroughly investigate the discrepancies, identify their root cause, find any lapses, and fix accountability. The firm, which submitted the report on Saturday, has assessed the total impact on the profit and loss account at `1,959.98 crore as of March 31, 2025.
A career banker with over 37 years of experience, Kathpalia has worked at leading multinational banks, including Citibank, Bank of America, and ABN AMRO, before joining IndusInd Bank. As MD and CEO of IndusInd Bank, he had focused on strengthening the balance sheet, building a robust liability franchise through realisation of deposits, diversifying the bank’s portfolio, and maintaining healthy capital adequacy.