SEBI Bans IndusInd Bank Ex-CEO Sumant Kathpalia, Four Others From Securities Market
IndusInd 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 Securities and Exchange Board of India has barred former IndusInd Bank Ltd. Chief Executive Officer Sumant Kathpalia and four others from dealing in the share market, claiming that they were aware of unpublished price sensitive information about the lender's derivative trades.
IndusInd Bank's former executive director and deputy CEO, Arun Khurana, along with head of treasury operations Sushant Sourav, head of GMG operations Rohan Jathanna, and chief administrative officer of consumer banking operations Anil Marco Rao are the other officials named in the order.
The individuals have been restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner until further orders, the SEBI said in an interim order on Wednesday.
According to the order, Kathpalia was aware about the accounting discrepancies in derivative trades and its huge impact in December 2023.
"During the preliminary examination, it is prima facie seen that members of the senior management of IBL including Noticees, were aware about the UPSI (unpublished price sensitive information) related to discrepancies and they had kept constant supervision upon the same," the order said.
The evidence analysed during the preliminary examination reveals that these individuals traded in the scrip of IndusInd Bank while being insiders.
While Sumanth Kathpalia, Arun Khuranna and Rohan Jathanna sold their shares in December 2023, Sushant Sourav and Anil Rao sold their shares in November 2023.
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.
Soon after, the bank started an internal review in the matter and informed the regulator about it. The bank had also appointed an external agency PwC to validate its internal findings.
Later, analysts asked the bank to clarify why the findings were not made public during the October-December quarter results. To this, the management said that it had no updates available at the time. Third quarter results were announced by the bank on Jan. 31.
"We never had a gap and there were so many audits which have gone through. It's just that we realise it now over a period of last one or two months, and I said that once it started coming in."
While Kathpalia and Khuranna resigned last month taking moral accountability on the derivate accounting gaps fiasco after investigations by external professional firms, it is important to understand that Anil Rao is one of the two executives running the bank since April 30.
According to the regulator, it started the investigation on March 10 itself, and at no point did SEBI during the two-and-half-month closed its investigation process.
The market watchdog also said that it did not give any clean chit during this period.
