IndusInd Bank is likely to see big changes at the top levels of its leadership, following a large financial setback from problems in its derivatives portfolio, according to sources who spoke to CNBC-TV18.
Senior Executives May Resign
At least three top executives, including CEO Sumant Kathpalia and Deputy CEO Arun Khurana, may step down in the coming months. Khurana was responsible for overseeing global markets, which includes the derivatives business — the area where the bank suffered the loss.
RBI’s Role in the CEO Succession Plan
The Reserve Bank of India (RBI) had recently extended Sumant Kathpalia’s term as CEO by just one year, which is shorter than usual. This move has prompted the bank’s board to begin planning for a new CEO. The RBI has reportedly asked the bank to submit a list of potential successors well before Kathpalia’s term ends in March 2026.
When CNBC-TV18 reached out to IndusInd Bank regarding the resignations and the CEO selection process, a spokesperson denied receiving any such directions and said they don’t comment on speculation.
₹1,979 Crore Loss from Derivatives
The issue began when IndusInd Bank discovered accounting problems in its derivatives segment — a complex area of finance involving financial contracts based on underlying assets like interest rates or currencies.
An external audit by PricewaterhouseCoopers (PwC) confirmed that the bank suffered a ₹1,979 crore financial impact due to these errors. This amount is slightly less than the bank’s own internal estimate but still a major hit.
When and How the Issue Was Found
The bank first revealed the issue on March 10, 2025, saying that an internal review had found errors in derivative account balances that had built up over 5 to 7 years. These were mistakes that went unnoticed for a long time.
In an interview on March 11, CEO Kathpalia said that the problem was first spotted in October 2024. Initially, they thought only two deals were affected, but the actual number turned out to be much higher. After realizing the full scale of the issue, the bank called a board meeting and went public with the news.
Effect on the Bank’s Financial Health
The loss of ₹1,979 crore amounts to 2.27% of the bank’s net worth as of December 2024. The bank has said it will include this loss in its financial statements for the fiscal year 2024–25.
Despite the setback, the CEO stated that the bank will still report a profit for the fourth quarter and for the full year, even after taking this loss into account.
RBI’s Concerns and Possible Outcomes
Although the financial impact aligns with what the RBI estimated — around ₹2,000 crore — the timing and manner of the disclosure has raised concerns with the regulator. These concerns may have added pressure on the bank’s leadership and could lead to senior-level resignations.
The bank also said it is taking strong steps to improve internal checks and controls, especially in the way it handles and accounts for derivatives.
