Looking into ‘any egregious violations’ in IndusInd Bank case, says Sebi chairman

On March 10, IndusInd Bank had disclosed that an internal review of its derivative portfolio revealed a potential 2.35 per cent adverse impact on its net worth.

Later, on April 29, weeks after IndusInd Bank disclosed accounting lapses and losses of nearly Rs 2,000 crore in its derivatives portfolio that triggered a rout in its shares, the bank’s Managing Director & CEO Sumant Kathpalia had resigned with immediate effect. IndusInd Bank had earlier announced the resignation of deputy CEO Arun Khurana.

IndusInd Bank has reported a net loss of Rs 2,329 crore for the quarter ended March 2025, the first quarterly loss in 19 years. The Bank had posted a net profit of Rs 2,349 crore a year ago. IndusInd Bank’s board on Wednesday said that it suspects the occurrence of fraud against the Bank and the involvement of certain employees having a significant role in the accounting and financial reporting of the Bank. “Though the capital adequacy of the bank is quite healthy, for business growth, should any further equity be required, IIHL, as the promoter of IBL, remains committed to supporting the bank, as it has done over the past 30 years,” said Ashok P. Hinduja, chairman, IndusInd International Holdings Ltd (IIHL), promoter of IndusInd Bank.

As per directives on investments issued by the RBI in September 2023, banks are prohibited from conducting internal trades/hedging and, accordingly, IndusInd Bank ceased internal trades from April 1, 2024. However, during an internal review, the bank identified certain discrepancies, wherein the accounting of losses on forex derivatives/ swap transactions executed prior to April 2024 (over the past 5-7 years) to hedge forex deposits/ debt were not recognised through net interest income, while the corresponding treasury gains were recognised in the profit and loss statement. Following the announcement, several broking firms downgraded the bank’s stock.

NSE IPO

The Sebi Chairman also said that all outstanding issues in the National Stock Exchange’s (NSE’s) initial public offering (IPO) will be resolved soon. “All the outstanding issues will be resolved and we will move forward…NSE and Sebi are talking, they are resolving the issues and I’m very hopeful it will be cleared and will move forward,” Pandey said. He, however, did not specify a timeline. “Can’t give a timeline but we should be doing it soon,” he said.

Last month, the Sebi Chairman had said that the regulator will not allow commercial interests to ‘override’ public interest while deciding the NSE’s IPO application.

The NSE’s IPO proposal has been pending with the Sebi for the last eight years. The NSE had filed its draft herring prospectus in 2016, and is still awaiting the regulator’s nod. The regulator has had concerns about governance and co-location. The bourse has now restarted its listing process by applying for a No Objection Certificate (NOC) at the Sebi. In March, Sebi had announced the formation of an internal committee to look into NSE’s IPO.