IndusInd Bank Shares Sink 3% Amid CEO Resignation and Derivative Accounting Concerns

Market Performance

IndusInd Bank shares sank sharply in early trade on April 30, dropping 3% after significant developments in its top management. The stock was trading at ₹816.90, down 2.4% on the NSE by 9:20 AM, reflecting investor concerns following recent internal turmoil and financial irregularities.

Main News

The sharp decline comes after Sumant Kathpalia, Managing Director and CEO of IndusInd Bank, resigned. His resignation is linked to ongoing issues in the bank's derivatives portfolio.

In his resignation letter, Kathpalia acknowledged moral responsibility, stating:

"I undertake moral responsibility, given the various acts of commission/omission brought to my notice."

This move follows the RBI's decision to approve only a one-year extension to Kathpalia's term instead of the three-year tenure requested by the bank.

Further intensifying concerns, Deputy CEO Arun Khurana stepped down on April 28, citing an adverse accounting impact related to internal derivative trades. As the overseer of the Treasury Front Office, Khurana's resignation adds to the leadership vacuum at a critical time.

Company Details

The bank recently revealed significant lapses in the accounting of derivative transactions. This has led to a major hit to its financials, triggering board-level scrutiny and a reassessment of senior management roles.

Financial Impact of Derivative Accounting Lapses

• Estimated Net Worth Impact: ₹1,979 crore
• Adverse Post-Tax Impact:
  • 2.27% of net worth (as of December 2024)
  • Previously estimated at 2.35%
• Date of Disclosure: April 26, 2025
• Board Response: Initiated accountability measures and senior-level restructuring

The board has assured that "necessary steps" are being taken to fix accountability and realign responsibilities within top management.

Summary

The resignation of both the CEO and Deputy CEO within days, coupled with a ₹1,979 crore hit to net worth from accounting discrepancies in derivatives, has spooked investors. The stock's 3% drop reflects rising apprehension over leadership stability and internal risk controls.

With a prolonged CEO hiring process expected to take 3-6 months, market participants may remain cautious in the short term. The spotlight is now on how swiftly IndusInd Bank can restore investor confidence and navigate its leadership transition.