IndusInd Bank’s board is reviewing possible penalties against two former top executives – Sumant Kathpalia (ex-MD & CEO) and Arun Khurana (ex-Deputy CEO) following a forensic audit that flagged potential insider trading violations. The issue is linked to discrepancies in the accounting of currency derivative transactions, as per Moneycontrol news reports.
As of 10:48 AM on May 15, 2025, IndusInd Bank share price was trading at ₹774.65, a 0.77% decrease, with a 23.19% decline over the past six months and a 45.55% drop over the past year.
On March 10, 2025, IndusInd Bank acknowledged an accounting issue. A forensic audit was ordered on March 20, and Grant Thornton submitted its report on April 26. The audit identified errors in how internal derivative trades were recorded, particularly during early terminations. This led to the reporting of notional profits and a cumulative adverse impact of ₹1,959.98 crore on the bank’s profit and loss account as of March 31, 2025.
According to the news reports, the audit found that both Kathpalia and Khurana were aware of the accounting discrepancy and traded in the bank’s stock before the information was publicly disclosed. The board has held multiple meetings to examine the findings and has also sought legal advice.
IndusInd Bank’s insider trading policy includes procedures for handling such violations. The board is currently reviewing the trades in question and is required to give both former executives a chance to respond before deciding on any penalty. The policy outlines penalties based on the number of violations.
In July 2024, the bank had imposed a ₹5 lakh penalty on independent director Bhavna Doshi for trading 667 shares during a restricted period. That incident was described as inadvertent.
Read more: IndusInd Bank to Review Insider Trading Allegations After Forensic Audit!
If the bank proceeds with a penalty under its insider trading code, SEBI may also initiate action under its own insider trading regulations, which mandate companies to maintain strict codes of conduct for designated persons with access to unpublished price-sensitive information.
Arun Khurana, who oversaw the bank’s Treasury operations, resigned on April 28, calling the events “unfortunate.” Kathpalia resigned the following day. IndusInd Bank, when asked for comment, referred to its May 9 exchange filing, where it acknowledged that certain findings in the Grant Thornton report may require examination from an insider trading perspective.
The board is currently evaluating accountability measures and possible realignment of senior roles. While no final penalties have been announced, the matter highlights serious compliance concerns tied to financial reporting and trading practices at the executive level.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: May 15, 2025, 2:05 PM IST
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