IndusInd Bank's ex-CEO and other individuals prohibited due to involvement in insider trading incident
SEBI Bars High-Ranking IndusInd Bank Officials Over Suspected Insider Trading
Mumbai — The Securities and Exchange Board of India (SEBI) has imposed a trading ban on some top-tier executives of IndusInd Bank Ltd., including its former CEO, Sumanth Kathpalia, and Deputy CEO, Amit Khurana. The prohibition follows an investigation into alleged insider trading, according to an initial SEBI order.
The regulator's investigation suggests that these executives engaged in trades of the bank's shares while in possession of price-sensitive information. In addition to Kathpalia and Khurana, the bank's head of treasury, head of global markets group, and the chief administrative officer are part of the sanctioned party list.
This decision comes after a wave of executive resignations from the bank in February, following the disclosure of a ₹20 billion ($234 million) accounting irregularity connected to IndusInd Bank's derivatives trades. In his departure letter, Kathpalia assumed "moral responsibility" for the various acts of "commission/omission" that had been brought to his attention.
The SEBI order states that top management of the bank was aware of the accounting discrepancy by early December, despite the public disclosure of the matter not occurring until March 10, 2025. This knowledge enabled the insiders to save nearly ₹197.8 million ($2.35 million) in losses from trading in the bank's shares, according to the regulator.
SEBI has allowed the accused 21 days to respond to its initial order.
For additional context, it's worth noting that the banking sector in India has faced increased scrutiny over accounting irregularities in recent times. This case, specifically involving the IndusInd Bank, has seen the involvement of several top-tier executives. The accounting discrepancies, primarily within the derivatives portfolio, are being investigated by both SEBI and the Reserve Bank of India.
The precise amount of the irregularities remains uncertain, with reports citing a range between ₹1,529 crores and over ₹3,000 crores ($183 million to $360 million). These discrepancies, if proven, would have a significant impact on the bank's financial stability and reputation.
The $234 million figure in the original text likely represents a rounded or earlier estimate of the derivatives and accounting discrepancies, but SEBI's focus is on the profits from alleged insider trades.
- The business sector, especially the banking industry in India, has been under the spotlight due to recent accounting irregularities, with the SEBI's investigation into IndusInd Bank being a notable example of general-news.
- Finance experts are closely watching the SEBI's ongoing probe into suspected insider trading by high-ranking officials of IndusInd Bank, including its former CEO and Deputy CEO, which has brought crime-and-justice elements into the business news.
- The financial implications of this case extend beyond the suspended executives, as the SEBI order suggests that top management at IndusInd Bank might have possessed price-sensitive information, potentially misusing it for personal gains, thereby impacting the bank's business and reputation.
