The IndusInd Bank shares continue to be in focus. The stock price is down 3% in early trade. The concerns around the bank don’t seem to be fading. The bank’s MD & CEO, Sumant Kathpalia, has also stepped down with immediate effect, a day after the Deputy MD also put in his papers. The bank has now announced the constitution of a “Committee of Executives” to discharge the duties, roles, and responsibilities of the former chief executive officer of the bank and take over the operations of the lender till a new CEO is appointed.
IndusInd Bank Shares
The IndusInd Bank share price has seen some recovery in the last one month after the sharp crash following the updates and announcements with regards to the accounting discrepancy. It is up 22% in the last 30 trading sessions after the share price nosedived almost as much. For 2025, so far, the share price is still down over 13%. The share price of IndusInd Bank has risen 5.4% in the past five trading days. The stock has increased by almost 23% over the previous one month. However, the scrip has fallen 21% in the last six months and erased 45% of investors’ wealth in the last one year.
IndusInd Bank: What happened so far
On April 29, the bank’s managing director and chief executive officer, Sumant Kathapalia, resigned effective from April 29 onwards.
“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,” read his resignation letter.
Following this, the IndusInd Bank in an exchange filing announced, “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&CEO of the Bank assumes charge or a period of 3 months from the date of relieving the incumbent MD&CEO, whichever is earlier.”
The resignation of the CEO and the formation of the committee to oversee the operations followed the company’s reporting lapses in its derivative accounting.
IndusInd Bank: Accounting discrepancy
These derivatives were used to manage foreign currency deposits and borrowings, converting them into Indian Rupees (INR). The lender expected that the cumulative impact of these discrepancies would reduce its net worth by 2.35%, or approximately Rs 2,100 crores in absolute terms.
To give you context, IndusInd Bank’s net profit declined by 39% year-on-year to Rs 1,402 crore for Q3 FY25 versus Rs 2,298 crore reported in the year-ago period. The interest, or net interest income, earned by the private lender in Q3FY25 stood at Rs 12,801 crore, up 11% compared with Rs 11,572 crore posted in the same quarter of the last fiscal year.