In a significant development for one of India’s leading private sector banks, IndusInd Bank’s Deputy CEO, Arun Khurana, announced his immediate resignation on April 28, 2025, following revelations of accounting discrepancies that have rocked the institution. The resignation, which comes on the heels of a ₹1,959.98 crore adverse impact on the bank’s profit and loss account, has sparked widespread discussion about corporate governance, accountability, and the future trajectory of IndusInd Bank.
The Backdrop: Accounting Lapses Surface
The trouble began on March 10, 2025, when IndusInd Bank disclosed irregularities in its derivatives portfolio, initially estimating a financial hit of approximately 2.35% of its net worth, or around ₹1,600 crore. Subsequent investigations by external auditors, including Grant Thornton Bharat and PwC, refined the figure to a staggering ₹1,959.98 crore as of March 31, 2025. These discrepancies stemmed from incorrect accounting practices related to internal derivative trades, particularly in the treasury front office, which Khurana directly oversaw as Whole Time Director and Deputy CEO.
The bank’s derivatives portfolio, used for hedging foreign currency borrowings, had been misreported over several years, with losses going unnoticed in prior audits. The Reserve Bank of India’s (RBI) directive in September 2023, which prohibited internal trades and hedging practices, further exposed these unresolved issues. IndusInd Bank ceased such trades on April 1, 2024, but the damage from earlier transactions had already been done.
Khurana’s Resignation: Taking Accountability
In his resignation letter, Arun Khurana took full responsibility for the oversight failures in the treasury front office. “Considering the recent unfortunate developments, wherein the Bank determined an adverse accounting impact on P&L, on account of incorrect accounting for internal derivative trades, I, having oversight of the Treasury Front office function, as the Whole Time Director, Deputy CEO and a part of Senior Management of the bank, hereby resign, effective immediately,” he wrote. Khurana, who joined IndusInd Bank in November 2011 and served as Deputy CEO since April 2020, expressed gratitude to the board for their trust and wished the bank well in its future endeavors.
The resignation marks the second high-profile exit from IndusInd Bank in recent months, following the departure of Chief Financial Officer Gobind Jain in January 2025. The bank has since appointed Santosh Kumar as Deputy CFO to stabilize its financial leadership, but the leadership vacuum left by Khurana’s exit raises questions about the bank’s next steps.
Market Reaction and Investor Sentiment
Despite the negative news, IndusInd Bank’s shares showed resilience, gaining as much as 3% on April 29, 2025, with the stock trading at ₹848.35 on the BSE. This followed a 40% recovery from its 52-week low of ₹606 on March 12, when the accounting issues first triggered a 27% single-day share price plunge. Over the past month, the stock has surged by 30.14%, outpacing the BSE Sensex’s 3.99% rise during the same period. Analysts attribute this rebound to investor confidence in the bank’s corrective measures, including the discontinuation of internal derivative trades and the board’s commitment to realigning senior management roles.
However, the stock remains down 13% year-to-date and 44% over the past year, reflecting ongoing concerns about regulatory scrutiny and management stability. Moody’s recently placed IndusInd Bank’s baseline credit assessment under review for a potential downgrade, citing internal control discrepancies and retail loan stress. Meanwhile, brokerage firms like Mirae Asset Sharekhan and ICICI Securities have downgraded their ratings to “Hold” and “Reduce,” respectively, signaling caution.
The Bigger Picture: Regulatory Oversight and Governance
The accounting scandal has drawn attention to broader issues of corporate governance and regulatory oversight in India’s banking sector. The RBI, which extended CEO Sumant Kathpalia’s term by only one year until March 2026, has reportedly urged the bank to identify potential CEO successors. Reports from CNBC-TV18 suggest that Kathpalia, along with other senior executives, may face pressure to step down, though the bank has denied these claims.
The RBI’s Governor, Sanjay Malhotra, addressed the IndusInd crisis in April 2025, describing it as an “episode” rather than a systemic failure. “The Indian banking system remains safe, secure, and robust,” Malhotra assured, emphasizing that such incidents are inevitable in a sector with thousands of financial institutions. Nonetheless, the central bank’s directive to conduct forensic audits by firms like Grant Thornton Bharat and Ernst & Young (EY) underscores its commitment to rooting out malpractices.
What Lies Ahead for IndusInd Bank?
As IndusInd Bank prepares to release its FY24-25 financial statements, the ₹1,959.98 crore hit will be reflected in its earnings, potentially impacting Q4 profitability. The bank has promised to strengthen internal controls and has already initiated a corporate restructuring to restore investor confidence. However, challenges remain, including a 5.2% quarter-on-quarter decline in net advances to ₹3,47,933 crore and flat deposit growth at ₹4,11,140 crore in Q4 FY25.
The resignation of Arun Khurana is a step toward accountability, but it also highlights the need for robust leadership and transparent governance. With the board actively seeking to fill key roles and address regulatory concerns, IndusInd Bank stands at a critical juncture. Investors and stakeholders will be closely watching how the bank navigates this turbulent period and whether it can reclaim its position as a trusted player in India’s banking landscape.
For the latest updates on IndusInd Bank’s leadership changes and financial performance, stay tuned to reliable business news sources.
Sources: Moneycontrol
