Sebi retracts words ‘board note' from IndusInd Bank order, says it was ‘engagement note'
Mumbai: Markets regulator Securities and Exchange Board of India (Sebi) on Friday issued a corrigendum to its 28 May order in the alleged insider trading case involving IndusInd Bank, clarifying that the words 'board note' should be read as an 'engagement note signed by the chief financial officer and noticee numbers one and two.'
'Noticee numbers one and two' are former deputy chief executive Arun Khurana and former chief executive officer (CEO) Sumant Kathpalia.
On 28 May, Sebi cracked the whip on former top executives of the bank for alleged insider trading. It barred former managing director and CEO Kathpalia, along with four other senior executives from the market and impounded gains of ₹19.78 crore, alleging they sold shares while in possession of unpublished price-sensitive information (UPSI).
A week before the order, IndusInd Bank chairman Sunil Mehta said the board was not informed of the derivatives discrepancies and that it took swift measures when it came to know. However, Sebi had said in its 28 May order that the bank had hired KPMG as early as on 29 January 2024 through a 'board note', to review the discrepancies revealed by an internal team, implying that the board was aware before the issue came to light on 10 March.
On Friday, Sebi replaced the words board note with the term engagement note, thus distancing the board from the decision to hire KPMG in 2024.
What RBI said
Meanwhile, the Reserve Bank of India (RBI) on Friday said IndusInd Bank has taken sufficient steps to improve its accounting practices, with governor Sanjay Malhotra noting that the bank is doing well overall.
The remarks signalled regulatory comfort with the lender's actions so far, and pushed its shares up over 5%.
The RBI's comments come nearly three months after IndusInd Bank disclosed issues in its derivatives book, which triggered a 27% crash in its shares. Since then, the bank has seen the exit of top executives and faced scrutiny from both the central bank and Sebi.
'The MD and CEO has resigned and it says for taking moral responsibility. So, I thought that should be good enough,' Malhotra said at the post-policy conference.
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