IndusInd Bank sees leadership shakeup as CEO Sumant Kathpalia resigns
IndusInd Bank is facing continued leadership upheaval as its Managing Director and Chief Executive Officer, Sumant Kathpalia, resigned with immediate effect, citing moral responsibility amid an internal derivatives accounting controversy. His departure marks the second high-level exit within a week, following the resignation of the bank’s Deputy CEO, Arun Khurana, on April 28, 2025.
In his resignation letter, Kathpalia wrote, “I wish to submit my resignation from the services of the Bank in relation to the ongoing Derivatives discussion. I undertake moral responsibility, given the various acts of commission/ omission that have been brought to my notice. I would request that my resignation be taken on record at close of working hours today.” He expressed gratitude to the regulators, board, management team, and employees for their support during his five-year tenure at the helm.
The leadership exits come in the wake of an internal probe into accounting discrepancies related to derivative trades within the bank. According to people familiar with the matter, the bank discovered errors in the accounting of internal derivative trades, which adversely impacted the Profit and Loss (P&L) statement. These revelations have raised serious questions about internal controls, risk governance, and the accountability of top leadership.
In response to Kathpalia’s resignation, the bank has announced that its board has approached the Reserve Bank of India (RBI) seeking approval to form a “Committee of Executives.” This committee will take over the duties and responsibilities of the CEO on an interim basis until a permanent successor is appointed. The committee is expected to ensure continuity in operations and provide a stable transitional leadership.
Kathpalia was re-appointed as Managing Director & CEO of IndusInd Bank for a further period of one year with effect from March 24, 2025 till March 23, 2026. He is a banker with over 37 years of rich experience in large multi-national banks such as Citibank, Bank of America, and ABN AMRO.
At IndusInd Bank, Kathpalia has been part of the core leadership team since joining the Bank 17 years ago and has been pivotal in turning the Bank around. He was responsible for the Bank's overall business strategy & execution, financial management, managing investor relations, mergers & acquisitions, evaluation of inorganic growth opportunities, digitisation, compliance, and governance.
As Managing Director & CEO of IndusInd Bank, Kathpalia led the Core Executive Team of the Bank that has successfully effected the Bank's business turnaround. Throughout his career, Mr. Kathpalia has gained diverse experience across various functions including Business Strategy, Sales & Distribution, Operations, Systems, Risk & Credit Management and Financial Management, People Management, Investor Relations, Mergers & Acquisitions, Compliance and Governance, etc
Arun Khurana, who served as Deputy CEO, had cited similar concerns in his resignation. In his letter, he stated, “I would like to resign considering the recent unfortunate developments, wherein the bank found an adverse accounting impact on P&L, on account of incorrect accounting for internal derivative trades.