Last Updated:
SEBI has banned former IndusInd Bank CEO Sumant Kathpalia and four other officials from the securities market over insider trading allegations.
SEBI’s action highlights growing scrutiny on financial misconduct in India’s banking sector. (IMAGE: REUTERS)
The Securities and Exchange Board of India (SEBI) on Wednesday barred former IndusInd Bank CEO Sumant Kathpalia, former deputy CEO and three other senior officials from participating in the securities markets over allegations of insider trading.
The interim order comes in the wake of a major accounting scandal that rocked the private sector lender earlier this year. In March, IndusInd Bank had disclosed that it suffered a hit of approximately ₹1,900 crore due to years of misreporting internal derivative trades. The bank said the issue had been traced back to incorrect internal accounting practices within its treasury department.
In a separate issue, the bank also reported that an internal audit of its microfinance portfolio revealed around ₹660 crore was wrongly recorded as interest income over three consecutive quarters. This misreporting further raised questions about the bank’s internal controls and financial reporting practices.
The regulator has impounded Rs 19.78 crore collectively from the five individuals, according to an interim order passed by Sebi.
The other officials restrained by Sebi are Arun Khurana, Executive Director and Deputy CEO of the bank at the time of the alleged violation; Sushant Sourav, Head- Treasury Operations; Rohan Jathanna, Head- GMG Operations and Anil Marco Rao, Chief Administrative Officer (CAO)- Consumer Banking Operations.
These senior executives are accused of trading in IndusInd Bank shares while in possession of unpublished price-sensitive information (UPSI), a breach of insider trading regulations.
The case stems from a Master Direction issued by the Reserve Bank of India (RBI), which had a significant impact on IndusInd Bank’s operations. The bank’s internal team had evaluated the financial implications of the directive and possessed non-public information at the time.
Sebi’s investigation found that the five individuals executed trades before this sensitive information was made public, using their access to confidential insights for potential personal gain.
Accordingly, SEBI said: “All the Noticees, viz. Noticee Nos. 1 to 5, are hereby restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, until further orders.”
(with PTI inputs)
- First Published: