IndusInd Bank's deputy CEO quits over accounting lapses

Mumbai: IndusInd Bank's deputy CEO Arun Khurana has resigned with immediate effect, taking responsibility for a nearly Rs 2,000-crore impact due to derivative trade accounting lapses. The bank disclosed Khurana's resignation, who was executive director and deputy CEO, in a filing on Monday.

Last month, RBI approved a one-year extension for the bank's MD and CEO, Sumant Kathpalia, as opposed to the three years approved by the board.

Khurana's resignation comes a day after the bank informed the stock exchanges that it would hold staff accountable for the hit of close to Rs 2,000 crore that the bank will take. An independent investigation, commissioned in March 2025, confirmed an adverse accounting impact of Rs 1,960 crore as of March 31. The report was submitted on Saturday and taken up by the board, which met for the purpose on April 26-27.

In his resignation letter, Khurana cited the recent discovery of an adverse accounting impact on the bank's profit & loss statement, resulting from incorrect accounting for internal derivative trades, as the reason for his decision. "I, having oversight of the treasury front office function, as the whole-time director, deputy CEO, and a part of the senior management of the bank, hereby resign, effective immediately. I would like to offer my assistance, as deemed appropriate, in transitioning my responsibilities to ensure a smooth handover," he said in his resignation letter.

The discrepancies stemmed from internal derivative trades between the asset-liability management desk and the treasury, which used accrual accounting, while external counterparties' trades were marked to market. This mismatch allowed IndusInd Bank to defer losses internally while prematurely booking gains externally, overstating earnings.