IndusInd Bank's Derivatives Discrepancy Was Known To Management 15 Months Before Disclosure: SEBI

The Securities and Exchange Board of India, in its order issued against IndusInd Bank Ltd.'s former Chief Executive Officer Sumanth Kathpalia and four others, said the top management of the private lender was aware of the derivatives discrepancy 15 months before its public disclosure.

The discrepancy was first revealed in the public by the bank on March 10, 2025. It had an estimated impact of Rs 1,960 crore on its balance sheet in fiscal 2025.

The unpublished price sensitive information, the reference used by the regulator for the discrepancies, was published "after a delay of approximately 15 months from the date when the members of the senior management of IBL first came in the knowhow of events, surrounding the discrepancies", according to the order.

The bank's internal team had even estimated the financial impact from the derivative gaps at Rs 2,362 crore in March 2024, SEBI said.

The bank also appointed professional firm KPMG to conduct external checks in January 2024 and estimated the impact of Rs 2,093 crore in February 2024, as per the order.

On March 10, 2025, Kathpalia had said during an analyst call that these derivative trades took place over five to seven years ago and came to light when the bank took the review of the portfolio after the RBI's accounting framework, which was identified by September and October 2024.

Kathpalia, along with Deputy CEO Arun Khurana, resigned from IndusInd Bank in April, a month after the accounting discrepancy came to light.

SEBI, in its Wednesday's order, has barred both of them from accessing the securities market. Along with them, Head of Treasury Operations Sushant Sourav, Head of GMG Operations Rohan Jathanna, and Chief Administrative Officer of Consumer Banking Operations Anil Marco Rao have also been restrained from buying, selling or dealing in securities.