India's IndusInd Bank said on Tuesday its CEO Sumant Kathpalia has resigned following a derivatives accounting lapse that has hit the bank's net worth.
The lender had in March disclosed accounting discrepancies in its derivatives portfolio, the impact of which roughly equated to an entire quarter's profits. A push for profits and lax controls led to the incorrect accounting practices that lasted for years.
The company's shares have dropped 7% since the announcement.
"I undertake moral responsibility, given the various acts of commission/omission that have been brought to my notice," Kathpalia said in his resignation letter.
His resignation as well as that of his deputy Arun Khurana on Monday comes on the back of the Reserve Bank of India urging the two to hand over their papers following the accounting lapses, Reuters had reported in March.
The company, India's fifth-largest private lender with a balance sheet of $63 billion, has sought approval from India's central bank to set up a committee of executives who will take charge of the CEO's responsibilities until a replacement is appointed.
The bank also appointed two external agencies to probe the lapses and pin down accountability.
Sumant Kathpalia had been a banker for nearly three decades and had been part of the bank for over 12 years in various capacities.
He was first appointed CEO in March 2020 and got a one-year extension from the central bank just before the accounting discrepancies were revealed.
In India, all bank appointments are cleared by the Reserve Bank of India, which is the central bank and the banking regulator.
