In March 2025, IndusInd Bank disclosed a massive accounting gap in its forex derivatives portfolio that had been known internally since December 2023. The bank's internal team estimated the financial impact at ₹2,362 crore by March 2024, and KPMG confirmed the issue at ₹2,093 crore in February 2024. Despite this, the bank delayed public disclosure for 15 months, only revealing the problem on March 10, 2025.
The delay had severe consequences. SEBI's investigation found that CEO Sumant Kathpalia and four other executives possessed unpublished price-sensitive information about the derivatives gap and sold shares before the public disclosure. SEBI banned all five from the securities market on May 28, 2025. Kathpalia and Deputy CEO Arun Khurana resigned in April 2025, citing 'moral accountability.' The bank's shares crashed 27% in a single day, wiping out approximately ₹19,052 crore in market value.
The bank later discovered additional accounting irregularities: ₹674 crore incorrectly recorded as interest income, ₹595 crore in unsupported balance sheet items, and ₹600 crore in interest accrual discrepancies on microfinance loans. Grant Thornton's forensic audit ultimately put the cumulative financial impact at approximately ₹1,960 crore. IndusInd Bank reported a net loss of ₹2,328.92 crore for Q4 FY2025.
The delay let the CEO and four executives sell shares before the news broke, triggering a SEBI ban and a ₹19,052Cr market wipeout.
The bank knew about the derivatives gap as early as December 2023 but delayed disclosure for 15 months, during which insiders sold shares.
The forex derivatives mismanagement went undetected because the bank's internal controls failed to flag the gap when the RBI's accounting framework changed in September 2023.
The CEO and top executives treated the inside information as a personal trading advantage rather than a disclosure obligation, compounding the accounting failure with insider trading.
A 15-month delay between finding a problem and disclosing it is not bookkeeping — it's governance. When executives who knew sold shares before the public, the error became a securities violation.
CEO Sumant Kathpalia and Deputy CEO Arun Khurana resigned. SEBI banned five executives from the securities market for insider trading. The bank reported a Q4 net loss of ₹2,328.92 crore. Grant Thornton conducted a forensic audit. Additional accounting irregularities were discovered in interest income and balance sheet items.
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