Following the resignation of long-time CEO Sumant Kathpalia, IndusInd Bank has constituted a “Committee of Executives” to oversee its operations until a new MD & CEO is appointed. Kathpalia stepped down on Tuesday, taking "moral responsibility" for accounting lapses found in the bank’s derivatives portfolio.
In an exchange filing today, the bank announced the composition of the “Committee of Executives,” which has received approval from the Reserve Bank of India (RBI) overnight.
The committee consists of Soumitra Sen, Head of Consumer Banking, and Anil Rao, Chief Administrative Officer. It will manage the bank’s day-to-day operations under the oversight of a Board-level committee. This Oversight Committee will be chaired by the Chairman of the Board and will include the chairs of three key board committees — the Audit Committee, the Compensation and Nomination & Remuneration Committee, and the Risk Management Committee.
Soumitra Sen, currently leading Consumer Banking & Marketing, is a Columbia Business School alumnus. He began his career at Nestle and moved into retail banking in 1994 with Bank of America. He later held roles at Deutsche Bank, ABN AMRO, and RBS, before joining IndusInd Bank in 2008.
Anil Rao, an MBA and IIT Delhi alumnus, began his professional journey in FMCG sales, handling markets in eastern and northern India. He later moved into banking, with stints at Bank of America, ABN AMRO, and RBS, where he oversaw branch banking and operations.
IndusInd Bank, in its filing, committed to maintaining operational stability during this transition period, stating that it is "taking all necessary steps to ensure stability and continuity of its operations while maintaining high standards of governance."
According to Elara Securities, with multiple negative events raising credibility issues, the possibility of the deposit being hit cannot be ruled out as customer confidence is affected.
"Core profitability would be hit and more importantly, recovery will take time," the brokerage said.
New CEO Search Expedited
In light of Kathpalia’s sudden exit, IndusInd Bank's board is expected to fast-track its CEO search. As per The Economic Times, the bank had engaged global executive search firm Egon Zehnder in March to look for suitable candidates for both the CEO and Deputy CEO roles. The firm is helping prepare a shortlist, and once internal evaluations are completed, the bank plans to submit a final list of three candidates to the RBI.
Several high-profile names from the Indian banking industry are reportedly in the running. These include Kaizad Bharucha of HDFC Bank, Anup Bagchi and Sandeep Batra of ICICI Bank, and Pralay Mondal from CSB Bank.
Kaizad Bharucha, 58, has been with HDFC Bank since 1995 and currently heads wholesale banking, covering corporate clients, PSUs, and capital markets. Another potential candidate from HDFC is Rahul Shukla, 55, who leads corporate lending and is currently on sabbatical.
From ICICI Bank, Anup Bagchi, 54, currently the CEO of ICICI Prudential, is seen as a strong contender. Other names from ICICI include Sandeep Batra (58), Executive Director, and Rakesh Jha (53), Head of Retail Banking.
External candidates under consideration include Rajiv Sabharwal (58), MD of Tata Capital and a former ICICI executive known for his expertise in retail and SME banking. Vishakha Mulye (56), another ICICI alumna and currently CEO of Aditya Birla Capital, is also being discussed.
Pralay Mondal, 55, now CEO of CSB Bank, is also in the mix. A seasoned retail banker, Mondal previously held senior roles at HDFC Bank and played a key role in building Yes Bank’s retail franchise.
What Led to Kathpalia’s Exit?
IndusInd Bank, India’s fifth-most valuable private sector lender, has seen a dramatic leadership shake-up in recent months. The turmoil began earlier this year when the bank disclosed accounting lapses in its derivatives portfolio, some dating back at least five years. These discrepancies could impact the bank’s net worth by 2.35% as of December 2024.
Notably, this disclosure came just days after the RBI had approved a one-year extension for Kathpalia. The bank’s board had initially recommended a three-year term.
Subsequent external reviews by PwC and forensic auditor Grant Thornton revealed that the misreporting could have a negative impact of Rs 1,979 crore on the bank’s net worth — a 2.27% hit as of December 2024.
Grant Thornton's forensic report identified the root cause as “incorrect accounting of internal derivative trades, especially in cases of early termination, which resulted in the booking of notional profits.”
