The Reserve Bank of India (RBI) has allowed IndusInd Bank’s board to appoint an interim “committee of executives” to oversee the operations of the bank in the absence of a chief executive officer. 

This follows the resignation of the bank’s managing director and CEO Sumant Kathpalia with immediate effect, taking moral responsibility of accounting lapses in the derivatives portfolio which had financial implication of nearly Rs 2,000 crore. Earlier, Grant Thornton had submitted its investigative report into accounting lapses in derivatives portfolio.

The committee of executives, comprising Soumitra Sen (Head – Consumer Banking) and Anil Rao (Chief Administrative Officer), will run the bank’s day-to-day operations under the supervision of an oversight committee of the board.

The oversight committee will be headed by Sunil Mehta, chairman of IndusInd Bank’s board, and will include the chairs of the bank’s audit committee, the compensation and nomination & remuneration committee, and the risk management committee.

The private lender said this interim arrangement has been approved by the RBI and will remain in place until a new MD&CEO takes charge or for a period of three months from the date of the previous CEO’s departure—whichever is earlier.

"The bank is taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance," the lender said in a statement.

Sen joined IndusInd Bank in 2008, after working with Bank of America, Deutsche Bank AG, ABN AMRO Bank NV and RBS.

Anil Rao, an MBA and an alumnus of IIT Delhi, has worked at Bank of America, ABN AMRO Bank and Royal Bank of Scotland (RBS). 

Grant Thornton had identified the incorrect accounting of internal derivatives trades as the root cause of the issue. The accounting errors had reduced the bank’s balance sheet by $230 million. 

As per Reuters, Grant Thornton’s report said the CEO and the deputy CEO had been aware of the lapses and had the power to resolve them, but did not do so.

Grant Thornton was appointed to investigate into the discrepancies in the accounting of IndusInd Bank’s derivatives portfolio and examine the roles and actions of its key employees.

Earlier this month, external agency PwC pegged the negative impact of IndusInd Bank’s accounting lapses in its derivative portfolio at Rs 1,979 crore. This represents 2.27% of the private sector bank’s net worth as of December 2024, slightly lower than the bank’s earlier internal review  estimate of an adverse impact of approximately 2.35%.

In March, the country's fifth-largest lender disclosed accounting discrepancies in its derivatives portfoIio.