A bank CEO's appointment, reappointment, and more

It's time for the RBI to revisit the process to clear the appointment of bank CEOs, as well as the extension of their tenure

- TAMAL BANDYOPADHYAY

On March 7, IndusInd Bank Ltd informed the stock exchanges that the Reserve Bank of India (RBI) had approved the reappointment of its managing director (MD) & chief executive officer (CEO) Sumant Kathpalia for a year until March 23, 2026. Kathpalia's current term ends on March 24.

If you were walking on the Mint Road in Mumbai on that day, you could have heard the Shah Rukh Khan dialogue from the Hindi film Om Shanti Om reverberating in the corridors of the RBI headquarters: "Picture abhi baaki hai, mere dost".

Here's what happened next.

After market hours last Monday, the bank informed the stock exchanges that it noticed "some discrepancies" in accounting of derivatives. A detailed internal review carried out by the bank estimated around 2.35 per cent impact on its net worth as of December 2024. In other words, it would need to provide around ₹1,600 crore for this. IndusInd Bank has appointed a reputed external agency to independently review and validate the internal findings. Once its findings are out, the actual impact on the balance sheet will be known.

The board meeting to discuss this, among other things, commenced at 4.12 pm; by 6.25 pm the discussion got over and the stock exchanges were informed even as the board meeting continued, with other agenda items on table.

On that day, IndusInd Bank share lost 3.86 per cent. The next day, the share price crashed 27.6 per cent, the sharpest fall in its history, wiping out ₹18,000 crore market capitalisation.

On March 15, the RBI issued a release, saying the bank was well capitalised and its financial position remained satisfactory. It had directed its board and the management to have the remedial action completed fully during the current quarter. There was no need for depositors to react to the speculative reports at that juncture. The bank's financial health remained stable and was being monitored closely by the RBI.