The Securities and Exchange Board of India (SEBI) has questioned IndusInd Bank’s management regarding why it did not disclose issues related to derivative instruments back in October 2024, when the bank first started investigating the matter. SEBI is concerned that even now, the bank is unable to determine the exact financial impact, raising doubts about why it withheld information from investors earlier.
On March 10, IndusInd Bank’s senior management, including CEO Sumant Kathpalia, deputy CEO and interim CFO Arun Khurana, and head of investor relations Indrajit Yadav, informed investors that the lapses were related to the treatment of certain foreign currency non-resident deposits. These were discovered in an internal review last year. The management informed that the estimated impact on net worth would be around 2.35 percent, but the figure was still approximate.
Kathpalia stated that the bank started noticing mismatches in its internal trade book in September-October 2024 and then hired an external agency to conduct a detailed review. The bank expects to finalize the findings by March-end or early April. However, since the review is still ongoing, the exact financial implication is yet to be determined.
SEBI officials believe that when the internal review was started, IndusInd Bank should have informed its investors, even though the financial impact was uncertain at that time. The regulator views the bank’s delayed disclosure as a failure of good corporate governance practices, said sources. SEBI believes that an internal investigation and the calculation of financial losses should have been treated as two separate things, with timely disclosures being made to investors.
The late revelation has not been taken kindly by market regulators, as transparency in financial matters is extremely crucial to maintain investor confidence. SEBI may take further action based on its ongoing assessment of the situation.
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Source: Moneycontrol.
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