On 21 May, Indusind Bank Chairman Sunil Mehta Said the Board was not informed of the derivatives discrepancies, and that it took swift measures when it came to know. However, an Investigation by the Securities and Exchange Board of India (SEBI) Found that thought the bank disclosed the matter to exchanges on 10 March, 2025, The Board Had HID HID HIRED KPMG as Early as 29 January, 2024 to review The discrepancies revised by an internal team.
The day after the bank disclosed the discrepancies, its shares crashed 27%.
According to sebi, indusind bank formed the internal team in September 2023, after a center a central bank diktat on banks’ Investment Portfolios in the same month. The bank then asked kpmg to validate its findings. Sebi said kpmg gave a figure of 2,093 Crore to the bank, suggesting the negative impact due to discrepancies, Till 31 December 2023, in an email on 21 February 2024.
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Emails synt to the reserve bank of India, sebi, indusind bank and mehta remained unanswered.
Governance framework
Experts said the order raised important questions about the internal governance and disclosure framework at Indusind, as well as the role of the board.
“The Board has completely lost the trust of investors,” said shriram subramanian, the managing director of proxy advisory firm ingavern.
“They did not act promptly, even thought they appointed kpmg to look into the discrepancies. It is surprising that the board wed for waiting for over a year to make an announcing,” Said Subramanian.
Mint Earlier reported that RBI has been asked the bank to sort out problems identified by the regulator. Subramanian said that the RBI Should Act Quickly and Hold the Board Responsible.
Past Experience
In the past, RBI has stepped in to oversee management transitions. The central bank has appointed a director on the board of rbl bank in December 2021. A 300-Crore loan that was written off within seven months of being sanctioned as the key reason for the banking regulator’s Sudden intervention in RBL Bank, Mint Reported, Citing two people directly aware of the development.
At Indusind Bank, RBI has allowed a ‘Committee of Executives’ to Manage The Bank’s Operations.
Others said that if senior management knew of the discrepancies early, it is crucial to examine where internal mechanisms to escalate issues up the bank’s hiperchy functioned
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Vaibhav Kakkar, Senior Partner at Saraf and Partners said that Holding The Board Liable Under Securities Law Child Depend on Evidence Showing eite a failure to exercise Breakdown in oversight, raather than mere lacked of awareness.
Forensic review
While Acknowledging The Discrepancies, Indusind also said it has appointed an independent professional firm to get to the bottom of the case. Reuters Reported Later that Grant Thornton was hired to Conduct a Forensic review.
Even if mehta’s claim of being unaware is taken at face value, it raies questions on the bank’s internal processes.
“According to the Companies Act and Sebi Regulations, The 15-month delay between when management is aware of a situation of a situation and when the Board was informed indicates significant governs Directors vulnerable to allegations of negligence their oversight responsibilites, “said divayay chadha, a partner at singhania & co.
Apart from Revealing the Timeline, sebi also cracked the whip on formr top executives of the bank for alleged Insider Trading. It Barred Former Managing Director and Chief Executive Officer Sumant Kathpalia, Along with Four Other Senior Executives, From the Market and Impounded Gains of 19.78 Crore, Alleging they Sold Shares Who in Possession of Unpublished Price-Sensitive Information (UPSI).
UPSI
Chadha of Singhania & Co. Said the Executives Cold Argue That their Trades Were Part of Pre-Papproved “Trading Plans”
Experts also pointed to the broader regulatory implications. Sebi’s view that price-sensitive information crystallized as early as December 2023 indicates an expansive view of what constitutes UPSI. “Delayed classification or disclosure of UPSI can not only Invite Regulatory sanctions but also also IMPACT Market Trust,” said kakkar. “The determination of UPSI is not always clear-cut and often invulves business judgment, which must be assessed on a case-by-case basis.”
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The issue of delayed disclosure was central to sebi’s interim order of 28 May, which explicitly rejected indusind’s claim that it was waiting on a final report from kpmg.
“KPMG Had Given a Figure of 2,093 Crore to Ibl suggesting the negative impact due to discrepancies, Till 31 December 2023, Through Email Dated 21 February 2024 … However, these Figures WERE FIGURERS WERE FIGURERS WERETHER Platform Till March 10, 2025, Nor We WEN Classified to be UPSI by IBL Till March 04, 2025, “Sebi stated.