Too many episodes: Where does the buck stop?

Should the resignation of senior bankers on moral grounds draw the curtains on mismanagement and accounting discrepancies?

- TAMAL BANDYOPADHYAY

Last Monday, April 28, IndusInd Bank Ltd's deputy chief executive officer resigned. A day later, its managing director and chief executive officer (MD and CEO) followed suit, "owning moral responsibility" for "various acts of omission/commission". The bank's chief financial officer had resigned in January.

This spate of resignations at the top was triggered by discrepancies in the accounting of derivative transactions. The deputy CEO was heading the bank's global market division, of which derivatives portfolio is a part.

Investigations are on to ascertain the impact on the bank's balance sheet.

In a separate incident, an inspection by the Reserve Bank of India (RBI) in February uncovered a massive fraud: Misappropriation of ₹122 crore from the cash reserves of New India Co-operative Bank. A former general manager had allegedly siphoned off the money between 2019 and 2025, with help from a few accomplices. He confessed to stealing cash from the bank's vault.

Ahead of that, in November 2024, during a routine inspection, housing finance regulator, National Housing Bank, discovered discrepancies in Aviom India Housing Finance Ltd's mutual fund investments, indicating inflated cash balances. A forensic audit revealed a significant accounting fraud.

RBI Governor Sanjay Malhotra says such incidents should be viewed as "episodes" that can occur in a financial system, which has a large number of players. Deputy Governor Swaminathan J says the RBI never wastes a crisis. Whenever such failures happen, it takes risk-mitigation measures and directs the boards to ensure proper forensic and accountability studies to identify who is accountable, and "actions will play out".