Delhi IndusInd Bank announced on Wednesday that the Reserve Bank of India (RBI) had approved the creation of an interim committee to supervise the bank’s operations. The committee will carry out the tasks, responsibilities, and roles of the CEO of the bank until a permanent CEO is chosen.

The action follows the resignation of Sumant Kathpalia, the managing director and chief executive officer of IndusInd Bank, due to the derivatives accounting error that has reduced the value of the private sector bank.

The bank said in a stock market filing that the committee, which is made up of Chief Administrative Officer Anil Rao and Head of Consumer Banking Soumitra Sen, would oversee the day-to-day operations of the bank under the direction of a Board Oversight Committee.

The Chairman of the Board will serve as the head of this oversight committee, which will also consist of the chairmen of the Risk Management, Compensation and Nomination and Remuneration, and Audit committees.

“With the RBI’s approval, the Board established this ‘Committee of Executives’ to supervise the Bank’s operations under the supervision and direction of the Board’s Oversight Committee until a new MD and CEO take over or three months after the current MD and CEO are relieved, whichever comes first,” the bank stated in its exchange filing.

According to the bank, it is “maintaining high standards of governance” while taking all necessary measures to guarantee the stability and continuation of its operations.

Early on Wednesday morning, IndusInd Bank’s shares dropped.

Arun Khurana, the bank’s deputy chief executive officer, also resigned after an independent audit revealed accounting irregularities in the bank’s derivatives portfolio.

On April 26, the results of the inquiry conducted by a reputable company chosen by the bank’s board were turned in. According to the audit report, the bank’s profit and loss account as of March 31, 2025, had a cumulative negative effect of Rs 1,959.98 crore as a result of improper accounting methods.

The problem was first revealed on March 10 when IndusInd Bank said that, as a result of inconsistencies in its derivative accounts discovered following an internal investigation, mark-to-market (MTM) losses in its derivatives book might affect as much as 2.35 percent of its net worth as of December 2024. The approximate amount of the net worth loss was Rs 1,600 crore.

To guarantee a proper evaluation of the losses, the RBI directed the bank to hire the international audit company Grant Thornton Bharat to carry out a forensic examination.

The Grant Thornton review found that the bank’s improper accounting of internal derivative transactions, especially in situations of early termination, resulted in notional gains and accounting anomalies.