Baptism by fire, burnt by lapses

KATHPALIA LED THE BANK WELL BEFORE THINGS TURNED FOR THE WORSE

- JOYDEEP GHOSH

SUMANT KATHPALIA should have read the tea leaves long back—the regulator had given enough signals of its discomfort with his leadership of IndusInd Bank at least twice in the past. In March 2023, the Reserve Bank of India (RBI) had reduced his tenure to two years, instead of the three years originally recommended by the bank's board. Last month, the RBI approved a one-year extension of his term even though the board had recommended a fresh three-year term.

Under his leadership, IndusInd Bank faced several other regulatory challenges. In December 2024, the RBI imposed a penalty on it for failing to adhere to deposit interest rate guidelines, while its probe revealed that the bank had opened savings accounts for ineligible individuals. In July 2022, a fine was imposed for non-compliance with Know Your Customer (KYC) norms. Also, in November 2021, the bank disclosed that it had inadvertently disbursed around 84,000 loans without customer consent due to a technical glitch.