Panel to run IndusInd Bank till new CEO logs in

Mumbai: The Reserve Bank of India (RBI) has approved IndusInd Bank‘s proposal to form a “committee of executives” to manage the bank’s daily operations until a new MD and CEO is appointed, the bank said in a regulatory filing. The interim committee will include Soumitra Sen – head of consumer banking, and Anil Rao – chief administrative officer (CAO).

The bank stated it is taking all necessary measures to ensure operational stability and business continuity while upholding strong governance standards.

Following the resignation of CEO Sumant Kathpalia with immediate effect earlier this week, IndusInd Bank had sought RBI’s permission to establish an interim executive committee to carry out the CEO’s responsibilities.

“We wish to inform that RBI, in the absence of an MD & CEO, has approved the constitution of a ‘Committee of Executives’ comprising Soumitra Sen and Anil Rao to oversee the bank’s operations,” the exchange filing said. This interim structure will function under the supervision and guidance of an Oversight Committee of the Board.

The Oversight Committee will be chaired by board chairman Sunil Mehta and will also include the chairs of the audit committee, the compensation and nomination & remuneration committee, and the risk management committee.In line with RBI’s approval, the bank’s board has officially constituted the committee of executives, which will remain in place until a new MD & CEO takes charge or for a maximum of three months from the date of the outgoing CEO’s departure – whichever comes first.In a dramatic twist, Sumant Kathpalia, CEO of IndusInd Bank, resigned on Tuesday, less than two months after discrepancies in the bank’s derivatives portfolio were revealed. His resignation comes closely after that of his deputy Arun Khurana, who stepped down a day earlier. Kathpalia, in his resignation letter, took full moral responsibility for the lapses that have shaken the institution.

“I wish to submit my resignation from the services of the bank in relation to the ongoing derivatives discussion,” Kathpalia wrote. “I undertake moral responsibility, given the various acts of commission and omission that have been brought to my notice. I would request that my resignation be taken on record at the close of working hours today.”

This swift leadership shake-up follows IndusInd Bank‘s announcement just days prior, signalling an intent to address the situation head-on by taking corrective action against the employees involved in the lapses and revamping its senior management structure to enhance accountability.

IndusInd Bank is under intense scrutiny due to a substantial ₹1,960-crore loss linked to misaccounted internal derivative trades. According to the bank, the losses were primarily the result of inaccurate accounting for internal derivative trades, particularly where contracts were terminated early. These errors led to inflated notional profits, concealing the true financial state of the derivatives portfolio over multiple reporting periods.