IndusInd Bank management was aware of Rs 1,500 cr derivatives discrepancies 15 months before disclosure

The Securities and Exchange Board of India (Sebi)'s interim order, released on Wednesday, mentioned that top officials at IndusInd Bank were aware of the accounting discrepancies in the bank’s derivatives portfolio as early as December 2022, more than 15 months before the issue was officially disclosed to the public on March 10, 2025.

Internal email communications reviewed by SEBI showed that:

> Senior management, including CEO Sumant Kathpalia and other executives, were discussing the discrepancies in derivative booking and margining well in advance.

> Despite this early awareness, the bank delayed classifying the information as Unpublished Price Sensitive Information (UPSI) until March 4, 2025.

> The information was officially disclosed only after the stock fell 27% in a single day.

> SEBI stated that this delay in classification and disclosure not only breached compliance protocols but also enabled certain insiders to offload shares and avoid significant losses — a move now under investigation for insider trading.

> This long lag between awareness and disclosure forms the crux of SEBI’s action, which includes barring five senior officials from the securities market and freezing their gains.

SEBI initiated a suo motu investigation into IndusInd Bank's stock price, which had plummeted by 27% following the disclosure of accounting discrepancies totaling ₹1,529 crore in the bank's derivatives portfolio on March 10, 2025.

The five officials named in SEBI's order include:

Sumant Kathpalia, former MD & CEO

Arun Khurana, former Executive Director and Deputy CEO

Sushant Sourav, Head of Treasury Operations

Rohan Jathanna, Head of GMG Operations

Anil Marco Rao, Chief Administrative Officer – Consumer Banking Operations

The 32-page order issued by SEBI detailed that all five executives of IndusInd Bank had sold their shares between December 4, 2023, and March 10, 2025, upon discovering discrepancies but prior to public disclosure. Among them, Kathpalia sold 1.25 lakh shares, averting a potential loss of ₹5.2 crore, while Khurana sold over 3.4 lakh shares, preventing a loss of ₹14.3 crore.