After the resignation of IndusInd Bank CEO Sumant Kathpalia, RBI has approved the appointment of an interim committee to lead the bank. This committee of executives will handle the day-to-day operations, customer services and financial decisions of the bank until the appointment of a new CEO. This team includes Consumer Banking Head Soumitra Sen and Chief Administrative Officer Anil Rao, who will jointly handle the functions of the CEO. RBI said that this committee will remain for a maximum of 3 months or till the new CEO is selected. The bank has also formed an oversight committee, which includes the heads of audit, risk management and appointment committees along with the chairman. Its purpose is to provide strategic guidance to the interim team and maintain the standards of governance. Kathpalia resigned on Tuesday IndusInd Bank’s Managing Director and CEO Sumant Kathpalia resigned from his post yesterday. This decision became effective from April 29 itself. Kathpalia cited responsibility for the 2.27% net worth loss in the bank’s derivatives portfolio as the reason for his resignation. He said, I am resigning taking moral responsibility for the mistakes pointed out to me. Kathpalia has been a part of the bank’s core management for 12 years. RBI had extended the tenure by 1 year Earlier, in March, RBI had extended Kathpalia’s tenure for only 1 year, while the bank had asked for an extension of 3 years. Now the bank had requested RBI that a committee should take charge of the bank until a new CEO is selected. Resigned after irregularities in derivative portfolio Indusind Bank had told in an exchange filing on March 10 that an internal review has revealed accounting discrepancy in the derivative portfolio. Due to this, the bank’s earnings may decrease and the net worth may fall by 2.35%. What is the matter, who will be affected? What is a derivative? A derivative is a financial contract between two parties. Whose value depends on the performance of the asset and the benchmark. Options, swaps and forward contracts are examples of this. They are used for risk hedging or speculative purposes.
