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IndusInd Bank Deputy CEO Quits Over Derivative Accounting Lapse

29 April 20251 min read
BANKING & FINANCEIndusInd BankDeputy CEO QuitsOver DerivativeAccounting Lapse29 April 2025safalsetu.com

Why in the news

IndusInd Bank’s Deputy CEO quit after the board reviewed losses from incorrect accounting of internal derivatives; he accepted responsibility as head of treasury front office.

Key facts

  • Independent probe from March 2025; final report on April 27; ₹1,960 crore adverse impact; board review April 26-27.
  • In March, RBI approved just one year more for MD and CEO Sumant Kathpalia, though the board sought three; the bank will hold staff accountable after its inquiry.

What went wrong

  • Trades between the ALM desk and treasury were booked on accrual basis, while external trades were marked to market.
  • Gains came early, losses were deferred, and profits were overstated.

Implications

  • Dents credibility and risk governance; analysts expect tighter scrutiny of derivative accounting in banks.

Test yourself

1. Which IndusInd Bank executive resigned after the derivative accounting lapse came to light?

Deputy CEO Arun Khurana resigned with immediate effect.

2. What was the total adverse P&L impact found by IndusInd Bank's probe as of March 31?

The final report put the adverse impact at ₹1,960 crore.

3. How were IndusInd's external derivative trades accounted for, compared with internal ones booked on accrual basis?

External trades were marked to market, internal ones used accrual accounting.

This topic is part of Daily Current Affairs 29 April 2025 (22 topics).

All topics of the dayDay quizApril 2025

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