Sumant Kathpalia, managing director and chief executive officer (MD & CEO) of IndusInd Bank resigns, citing ‘moral responsibility’ for various acts of commission or omission following accounting lapses that resulted in a loss of nearly Rs. 2,000 crore. 

In March, RBI had extended his term by one year, despite the board clearing him for a three-year extension as MD & CEO. This was a second consecutive time since March 2023 that the RBI had approved a shorter tenure despite the board approving a three-year term for Kathpalia.

Sumant had noted during an analyst call that discrepancies in the bank’s derivatives portfolio might have influenced the RBI’s decision to limit his extension.

Grant Thornton, the firm appointed by the bank to investigate the root cause of the discrepancies in the derivatives portfolio and examine the roles and actions of key employees, submitted a report following his departure. On Monday, Deputy CEO Arun Khurana had also resigned in connection with the same accounting issues.

 

Sumant in his resignation letter, stated: “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.”

 

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The bank’s board has approached the Reserve Bank of India (RBI) seeking approval to constitute a ‘committee of executives’ to oversee the duties, roles, and responsibilities of the CEO on an interim basis until a permanent successor is appointed.

Last year, Thoothukudi-based Tamilnad Mercantile Bank had taken a similar step, appointing a three-member Committee of Executives (COEs) in the absence of a CEO.