IndusInd Bank: SEBI bans former CEO and four executives over insider trading
Securities and Exchange Board of India (SEBI) has issued an ex-parte interim order against five senior officials of IndusInd Bank, including former CEO Sumanth Kathpalia, in connection with an insider trading case.
The regulator found that these individuals sold shares while in possession of unpublished price sensitive information (UPSI), thereby avoiding losses estimated at approximately Rs 19.78 crore.
The case pertains to discrepancies in IndusInd Banks derivative portfolio that came to light internally in late 2023, following a revised RBI directive on derivative accounting. According to SEBI, internal communications indicated that by December 2023, the bank had estimated a potential adverse financial impact of Rs 1,572 crore, or 2.35% of its net worth. However, this information was not disclosed to the stock exchanges until 10 March 2025.
Following the delayed disclosure, IndusInd Bank's share price crashed 27% on 11 March 2025, to its lowest level since November 2020. SEBIs preliminary findings revealed that Kathpalia and Deputy CEO Arun Khurana, along with three other senior executives, sold substantial quantities of shares just prior to the public announcement. Kathpalia sold 1.25 lakh shares, while Khurana sold over 3.48 lakh shares. None of these trades were reported as part of a pre-approved trading plan.
SEBI has frozen the bank and demat accounts of the individuals to the extent of the gains made and has prohibited them from trading in securities until further notice. The accused have also been instructed to submit detailed financial and asset disclosures within 15 days.
The investigation is ongoing, with SEBI continuing to examine potential disclosure violations and the involvement of additional individuals. The regulator emphasized that these interim measures are aimed at preserving market integrity and investor confidence.
IndusInd Bank reported a standalone net loss of Rs 2,235.99 crore in Q4 FY25 as against a net profit of Rs 2,346.84 crore posted in Q4 FY24. Total income declined 22.83% year on year to Rs 11,342.65 crore in Q4 March 2025.
Shares of IndusInd Bank rose 2.41% to settle at Rs 824.15 on the BSE.
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