RBI Approves Interim Panel to Oversee IndusInd Bank After CEO Sumant Kathpalia's Exit
The Reserve Bank of India (RBI) has sanctioned the setting up of an interim Committee of Executives to manage the day-to-day affairs of IndusInd Bank, after the abrupt resignation of its Managing Director and Chief Executive Officer, Sumant Kathpalia.
The bank disclosed the news in a regulatory filing on Wednesday, stating that the interim management arrangement was put in place with RBI's approval by a letter dated April 29, 2025. The committee will be in place until a new MD&CEO is appointed or up to three months from the day Kathpalia left, whichever is earlier.
The interim committee consists of Soumitra Sen, Consumer Banking Head, and Anil Rao, Chief Administrative Officer. They will be overseen by an Oversight Committee of the Board led by the Chairman of the Board and having the heads of the major board committees such as Audit, Compensation & Nomination, and Risk Management.
This action follows Kathpalia submitting his resignation on Tuesday citing moral responsibility over matters pertaining to derivatives trading. In his resignation letter, he admitted 'acts of commission and omission' pertaining to derivatives-related losses and deficient accounting practices that overstated notional profits and misrepresented the financial position of the bank's portfolio.
Kathpalia's departure was followed by the resignation of his deputy, Arun Khurana, a day earlier, creating further leadership uncertainty at the private lender. This led to the bank going to the RBI on its own initiative to seek approval for a transition mechanism to facilitate business continuity and governance.
"The Bank is taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance", IndusInd Bank said.
Kathpalia, who took charge in March 2020, guided the bank during a period of growth, increasing the balance sheet from Rs 4.24 lakh crore in March 2020 to Rs 5.43 lakh crore as of December 2024. Yet his tenure saw a string of regulatory mishaps such as penalty for non-KYC compliance, contraventions in deposit rates of interest, and illegal loan release to thousands of clients.
Though the RBI had granted him a one-year extension in 2024, the central bank had earlier curtailed his term twice, indicating concerns over leadership practices. In an analyst call earlier, Kathpalia had remarked on the RBI’s discomfort with his leadership, acknowledging the need for a smooth succession.
The bank now faces a crucial transition period as it seeks to restore investor confidence and regulatory credibility.
