IndusInd Insider Case: Government Seeks Fair Probe, Police Complaint Likely — Profit Exclusive
The bank’s board has been advised to file a police complaint against those named in SEBI’s interim order, sources say.
The government is pressing for a fair and independent inquiry into the insider trading case involving former top executives of IndusInd Bank, top sources have told NDTV Profit. The bank’s board has been advised to file a police complaint against the noticees named in SEBI’s ex-parte interim order.
The capital market regulator Securities and Exchange Board of India (SEBI), in its interim order, barred five individuals—including former CEO Sumant Kathpalia—from trading in the markets. The regulator has also impounded Rs 19.8 crore in alleged unlawful gains.
Sources say SEBI’s whole-time member will summon the barred executives after 21 days to present their case. These quasi-judicial proceedings will allow the accused to make submissions and raise objections. A final order will be passed based on their responses and may include disgorgement of gains and steep penalties.
Penalties in insider trading cases can range from Rs 10 lakh to Rs 25 crore, or three times the profit made—whichever is higher. The findings may also pave the way for potential criminal proceedings, officials familiar with the matter added.
"Once police complaint being filed, the federal agencies will look into the case and whether it could be taken up for criminal proceedings. Meanwhile, the formers bankers can exercise their legal rights and seek interim relief from the Securities Appellate Tribunal," an official said.
After the disclosure and subsequent stock plunge, SEBI launched a suo motu investigation against IndusInd Bank to track trades potentially made using unpublished price-sensitive information (UPSI) linked to the derivative losses. The probe covered data from NSE, BSE, depositories, KPMG, and IndusInd Bank, specifically examining the period between September 12, 2023 and March 10, 2025.
In its 32-page interim order, SEBI found that the five individuals in question traded while in possession of UPSI, effectively helping them avoid major losses. The order stated, “It would be unrealistic to believe that the noticees engaged in routine trading while serious discussions were underway regarding discrepancies with significant financial implications.”
