IndusInd Bank shares drop over 3% after CEO Sumant Kathpalia resigns amid accounting lapses

IndusInd Bank’s shares fell over 3% on Wednesday following the resignation of its Managing Director and CEO, Sumant Kathpalia. The stock dropped to ₹810.40 on the BSE and ₹810.05 on the NSE, reflecting investor concerns over governance and financial reporting issues. Kathpalia stepped down on April 29, 2025, citing “moral responsibility” for accounting lapses in the bank’s derivatives portfolio, which have had a financial impact of ₹1,960 crore.

The resignation comes amidst a leadership crisis at the bank, with Deputy CEO Arun Khurana resigning earlier this week and CFO Govind Jain stepping down in January. The accounting discrepancies, revealed through an external audit, have raised questions about the bank’s internal controls. The lapses, primarily related to the derivatives portfolio, have resulted in a cumulative adverse impact on the bank’s profit and loss account.

In response, the bank’s board has sought approval from the Reserve Bank of India (RBI) to form an interim “Committee of Executives” to oversee operations until a new CEO is appointed. The RBI had previously limited Kathpalia’s tenure extension to one year due to governance concerns.

The developments have added to the uncertainty surrounding IndusInd Bank, with its shares experiencing a 7% decline since the disclosure of accounting discrepancies in March. The bank is now under scrutiny as it works to stabilize its leadership and address the financial and governance challenges.