Reserve Bank of India Governor Sanjay Malhotra has assured that IndusInd Bank, grappling with accounting discrepancies suspected of fraud, has taken enough steps to improve the practices and the “issue should settle down very soon”.

The bank is “doing well on the whole” now and the resignation of managing director and CEO Sumant Kathpalia should be seen as a "good enough" step from an accountability perspective.

The RBI is closely monitoring the accounting issues and the bank has implemented the necessary steps to improve the internal processes.

"The MD and CEO of the bank resigned, owning moral responsibilities. So, I thought that should be good enough. Do you expect that all the board members (should resign)... I think the MD and CEO, who is also a member of the board... has taken responsibility, that is at the board level itself," Malhotra said during the post-monetary policy press conference.

The Governor made it clear that RBI will not shy away from taking any action against the bank and the law will take its own course if there are any criminalities in the matter.

In March, IndusInd Bank revealed that years of incorrect accounting of internal derivative trades led to a $230 million hit to its accounts for the financial year ended March 31 2025.

An internal audit of its microfinance business found that around $80 million was incorrectly recorded as interest over three quarters, which it reversed in January.

In April, CEO, Kathpalia, and deputy CEO, Arun Khurana, stepped down on successive days.

It posted its worst quarterly performance with a Rs 2,329 crore loss in Q4FY25, as it took the brunt of all the accounting lapses and oversights.

RBI Deputy Governor Swaminathan J said that IndusInd Bank, now under a transitory management, has complied with all the regulatory asks over the past few months.

The Hindujas-promoted private sector lender took on board all the accounting discrepancies, held a forensic audit to fix responsibility, ensured that none of the customers or the broader banking system is impacted and is also working on succession plan, Swaminathan said.

There are a lot of learnings for the RBI from the crisis, he said, adding that it will look for red flags in future so that it is able to anticipate a crisis much in advance.