IndusInd Bank sought to reassure investors and depositors on Wednesday after a series of senior-level resignations, including the bank’s CEO, following a major accounting discrepancy related to internal derivative trades, which is estimated to cost the bank nearly ₹1,960 crore.
“The bank is taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance,” the lender said in a stock exchange filing.
Following an RBI approval on Tuesday, the bank’s board has constituted a ‘committee of executives’ to discharge the responsibilities of the CEO, for an interim period until a permanent CEO is appointed.
Soumitra Sen, head — consumer banking and Anil Rao, chief administrative officer of the bank, are members of the committee.
“The board has constituted such a ‘committee of executives’ to oversee the operations of the bank under the oversight and guidance of the oversight committee of the board till a new MD&CEO ... assumes charge or a period of 3 months,” the filing said.
The oversight committee shall be chaired by board chairman Sunil Mehta and comprise of chairs of the audit committee, compensation and nomination and remuneration committee and risk management committee as members.
On Tuesday, the bank’s MD and CEO, Sumant Kathpalia, took moral responsibility and tendered his resignation. This comes a day after the bank’s deputy CEO Arun Khurana, who had oversight of the treasury front office function, resigned on Monday. The bank’s CFO, Gobind Jain, had resigned in January.
Notably, the RBI had earlier approved only a one-year reappointment for Kathpalia instead of the requested three-year extension by the bank.
IndusInd Bank’s shares recovered from early losses on Wednesday, closing slightly up at ₹838.45 on the BSE.
On Sunday, IndusInd Bank had informed bourses that a bank-appointed external auditor has determined a cumulative adverse accounting impact on profit and loss at ₹1,959.98 crore as on March 31.
“The CEO resignation has derailed hopes of a smooth transition, while raising the risk of an RBI nominee appointment on the board/a PSU banker as CEO. Even assuming a private banker appointment, we believe the recovery process will be stretched as the appointee will need time to rebuild,” analysts at Emkay Global said.