IndusInd Bank Faces Turmoil After CEO Resigns Over Accounting Lapses

IndusInd Bank appointed a committee to manage operations after CEO Sumant Kathpalia resigned due to a significant accounting lapse in the derivatives portfolio. The error impacted profits by Rs 1,960 crore. An oversight committee, chaired by the board's chair, will provide guidance until new leadership is appointed.

IndusInd Bank has announced the formation of a 'Committee of Executives' to manage operations in the wake of CEO Sumant Kathpalia's resignation. Kathpalia stepped down after accounting discrepancies in the bank's derivatives portfolio were uncovered, costing the bank Rs 1,960 crore.

In a regulatory filing, IndusInd Bank stated that the newly appointed committee would operate under the supervision and guidance of the board's oversight committee. This group includes chairs from the bank's Audit, Compensation and Nomination & Remuneration, and Risk Management Committees, and it will steer the bank during this transition period.

The accounting issues, identified by an external auditor, have led the bank to take decisive steps to fortify its governance and ensure operational stability. The financial irregularities mainly stem from incorrect accounting of internal derivative trades, which resulted in notional profits and skewed financial reports.

(With inputs from agencies.)