The Reserve Bank of India (RBI) said on Friday that IndusInd Bank is doing well and has taken enough steps to improve its accounting practices. RBI Governor Sanjay Malhotra shared this update, which made investors feel more confident, causing the bank’s shares to rise over 5%.
These positive comments come around three months after the bank revealed some issues in its derivatives trading, which earlier led to a 27% drop in its stock price. Since then, top leaders of the bank have resigned, and both the RBI and SEBI (the stock market regulator) have been looking into the matter.
Governor Malhotra said, “The Managing Director (MD) & CEO resigned to take moral responsibility. I believe that’s enough.” His statement helped the bank’s shares go up to ₹845.9 per share on the Bombay Stock Exchange (BSE)—a 5.3% rise. However, the stock is still about 8.6% lower than it was on March 10, when the issue was first publicly disclosed.
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When asked if the entire board should be held responsible, Malhotra said that since the MD & CEO is also a board member and he resigned, that covers board-level accountability.
Leadership Changes at the Bank
The bank is going through a leadership change. Deputy CEO Arun Khurana left soon after an audit report pointed out the issue, and CEO Sumant Kathpalia also stepped down before a new CEO was appointed.
Interestingly, although the bank officially disclosed the issue on 10 March 2025, a report from Mint reveals that it had already hired KPMG for an internal review on 29 January 2024. This raises concerns about why the matter wasn’t shared with stock exchanges earlier.
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RBI’s Three-Step Action Plan
RBI Deputy Governor Swaminathan J said the bank has met all requirements, including:
- Properly reporting the accounting issues in its financial results.
- Conducting a forensic audit and finding out who was responsible.
- Making sure no customer suffered any loss or trouble.
He also said that these kinds of incidents help RBI learn and improve its monitoring systems to catch such problems early in the future.
SEBI Action
Last week, SEBI took strict action by banning former CEO Sumant Kathpalia and four other top executives from the market. They were also asked to return ₹19.78 crore, which SEBI said they earned by selling shares while having confidential information that wasn’t yet made public.
