IndusInd Bank Denies Reports About Senior Leadership Exiting The Lender

Media reports on Friday claimed that the Reserve Bank of India (RBI) has called on IndusInd Bank's CEO and Deputy CEO, urging them to resign following significant discrepancies found in accounting. 

Last week, IndusInd Bank acknowledged inconsistencies in its derivatives portfolio, estimating a potential one-time loss of Rs 2,000 crore for the March quarter.

Source : X/@MyIndusIndBank

IndusInd Bank dismissed media reports suggesting that its top executives would step down within months following accounting irregularities. The bank issued a strong rebuttal on Friday and emphasised that the reports were inaccurate.

A spokesperson for the lender said, “We would like to clarify that the recent media reports regarding the tenure of the Bank’s CEO and Deputy CEO are factually incorrect. The Bank strongly denies the claims made in these articles. The information circulating is entirely inaccurate and does not reflect the true situation,” reported Moneycontrol.

RBI’s Alleged Concerns and Regulatory Oversight

Notably, media reports on Friday claimed that the Reserve Bank of India (RBI) has called on IndusInd Bank's CEO and Deputy CEO, urging them to resign following significant discrepancies found in accounting. 

Citing sources in the know, a report by Reuters said that the central bank expressed that it has lost confidence in the senior leadership but it preferred an orderly transition to avoid spreading any panic among depositors.

Further, the report noted that RBI advised that new leadership should come from outside the organisation. Notably, the regulator recently granted a one-year extension to CEO Sumant Kathpalia. 

Typically, the recommendations for candidates for leadership positions are made by the bank. However, seeking approval from RBI remains essential. The RBI is also known for informally guiding banks facing governance or financial issues in appointing external candidates.

Financial Health and Recent Disclosures

Following the disclosure of accounting discrepancies, the RBI reassured stakeholders on March 15 that IndusInd Bank remains well-capitalised and financially stable. According to the RBI, the bank reported a Capital Adequacy Ratio of 16.46 per cent and a Provision Coverage Ratio of 70.20 per cent as of the end of the December quarter. Additionally, its Liquidity Coverage Ratio (LCR) stood at 113 per cent as of March 9, surpassing the regulatory requirement of 100 per cent.

Last week, IndusInd Bank acknowledged inconsistencies in its derivatives portfolio, estimating a potential one-time loss of Rs 2,000 crore for the March quarter. The irregularities surfaced during a review of its currency derivatives operations, raising concerns over internal oversight.