Induslnd Bank MD & CEO Sumant Kathpalia Resigns Amid Derivatives Saga

(The Corner Office Journal) -- Induslnd Bank Ltd. said its Managing Director and Chief Executive Officer Sumant Kathpalia resigned and a committee of executives will oversee the operations of the bank in the interim.

Kathpalia resigned from the bank with effect from close of working hours on 29 April, the private-sector lender said in a stock exchange announcement.

“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 to the bank’s board.

In March 2025, the bank disclosed that it noted certain discrepancies in accounts balances of its derivatives portfolio. Induslnd Bank’s internal review had estimated an adverse impact of about 2.35% to its net worth as of December 2024.

An external agency, which independently reviewed the bank’s internal findings, later pegged the negative impact of certain discrepancies in the bank’s derivatives portfolio at 1,979 crore rupees ($232 million) as of 30 June 2024.

Based on the agency's report, Induslnd Bank assessed an adverse impact (on a post-tax basis) of 2.27% to the bank’s net worth as of December 2024 due to these discrepancies.

“I undertake moral responsibility, given the various acts of commission/omission that have been brought to my notice,” Kathpalia said.

The bank's Executive Director and Deputy CEO Arun Khurana had also resigned with effect from 28 April, considering the "recent unfortunate developments."

Executives Committee

Induslnd Bank said it had sought the Reserve Bank of India's (RBI) approval to constitute a committee of executives to discharge the duties, roles and responsibilities of the CEO for an interim period following the resignation of Kathpalia.

The RBI, in the absence of an MD & CEO of the bank, approved the constitution of a committee of executives to oversee the lender’s operations, it noted.

The bank said the committee comprises Soumitra Sen (head - consumer banking) and Anil Rao (chief administrative officer) as members.

The oversight committee will be chaired by the board chairman and comprise the chairs of audit committee, the compensation and nomination & remuneration committee as well as the risk management committee as members.

Induslnd Bank said the oversight committee will look after the bank’s operations until a new MD & CEO assumes charge, or a period of three months from the date of relieving the incumbent MD & CEO, whichever is earlier.

Microfinance Woes

Last week, Induslnd Bank said it has engaged consulting and auditing firm EY to help the lender’s internal audit team in the review of its microfinance business.

Induslnd Bank's Internal Audit Department is conducting a review of its microfinance institution (MFI) business to examine certain concerns, which have been brought to the bank’s attention.

The bank today said it is taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance.

Note: $1 = 85.1818 Indian rupees

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