The move comes as the bank grapples with an ongoing probe into accounting discrepancies in its derivatives portfolio.
Kathpalia's exit, effective immediately, brings to a close his five-year tenure at the helm of the bank.
Deputy CEO and whole-time director Arun Khurana had also resigned a day earlier, citing the adverse accounting impact on the bank’s profit and loss due to “incorrect accounting for internal derivative trades.” Khurana had previously held oversight of the bank’s treasury front office, a key function tied to the issue.
The leadership exits come after a series of senior-level changes in the bank's finance division. Khurana had been promoted to chief financial officer in January, following the resignation of former CFO Gobind Jain, who left citing personal reasons.
In the wake of the crisis, the bank’s board has sought the Reserve Bank of India’s (RBI) nod to form a ‘committee of executives’ under Section 10B(9) of the Banking Regulation Act, 1949. This interim team would assume CEO responsibilities until a permanent appointment is made.
The PWC report engaged by IndusInd Bank to quantify the losses due to discrepancies in its derivative portfolio has put the final number of the negative impact on the bank's net worth at Rs 1979 crore. Based on the report, the IndusInd Bank said it has assessed an adverse impact (on a post-tax basis) of 2.27% to the bank’s net worth as of December 2024 on account of these discrepancies. The final number by PWC is slightly lower than the 2.35% of net worth hit, the bank had estimated in March. The bank received the report from the external agency on April 15.
IndusInd Bank offers a wide range of products and services for individuals and corporates, including microfinance, personal loans, personal and commercial vehicle loans, credit cards and SME loans.
The bank’s standalone net profit declined 39% to Rs 1,401.28 crore while total income increased 8.5% YoY to Rs 15,151.01 crore in Q3 FY25 over Q3 FY24.