The Securities and Exchange Board of India (SEBI) has barred former MD & CEO of IndusInd Bank Sumant Kathpalia, former executive director & deputy CEO Arun Khurana and three others have been barred from equity markets in an alleged insider trading case. The capital market regulator has also ordered disgorgement of Rs19.78 crore from the five former top executives.
Sebi passed an interim order against the five former top executives of IndusInd Bank, who allegedly sold shares worth over Rs 74 crore while in possession of unpublished price-sensitive information (UPSI).
Apart from former MD & CEO and former executive director & deputy CEO, the order was passed against senior officials Sushant Sourav, Rohan Jathanna, and Anil Marco Rao. All were part of the bank’s senior management during the relevant period.
SEBI’s investigation revealed that these executives were aware of significant discrepancies in the bank's derivative portfolio—an issue stemming from new RBI directions on accounting issued in September 2023. Internal emails showed they were aware as early as November 2023 that these discrepancies could materially impact the bank’s net worth.
Despite this, IndusInd Bank disclosed the issue to stock exchanges only on 10 March 2025, after market hours. The disclosure caused the stock to crash 27.17% the next trading day, wiping off nearly Rs 1,530 crore in value. SEBI found that the five officials sold shares during the UPSI period—between December 4, 2023 and March 10, 2025—thereby avoiding substantial losses.
The regulator has directed that the impounded funds be placed in fixed deposits with a lien marked in favour of SEBI. The five individuals are also barred from accessing the securities market until further notice. Their bank and demat accounts have been frozen to the extent of the impounded amount.
“This is very, very serious,” Sumant Kathpalia had remarked in an internal email dated December 17, 2023, acknowledging the severity of the accounting impact. Despite this, SEBI noted, the bank delayed public disclosure for over 15 months since first identifying the issue.
SEBI continues to investigate the case for potential disclosure lapses and is examining other suspects. The regulator has given the five noticees 21 days to respond and seek a personal hearing.
It must be noted that earlier this year, the bank had identified Rs 1,979-crore losses due to discrepancies relating to derivatives accounting. This led to the ouster of MD and CEO Sumant Kathpalia and whole-time director and & deputy CEO Arun Khurana.