In his resignation letter addressed to the Board of Directors, Khurana cited recent developments involving adverse accounting impacts on the bank’s profit and loss account. These impacts were linked to incorrect accounting of internal derivative trades under his oversight as part of the Treasury Front Office function.
“Considering the recent unfortunate developments, wherein the Bank determined an adverse accounting impact on P&L, on account of incorrect accounting for internal derivative trades, I having oversight of the Treasury Front office function, as the Whole Time Director, Deputy CEO and a part of Senior Management of the bank, hereby resign, effective immediately,” Khurana stated in his letter.
The developments follow an independent investigation by a professional firm appointed by the bank’s board on March 20, 2025. The firm submitted its report on April 26, confirming that incorrect accounting practices led to an adverse cumulative impact of Rs 1,959.98 crore on the bank’s profit and loss account as of March 31, 2025.
The discrepancies mainly arose from incorrect accounting of internal derivative trades, particularly in cases involving early termination. These mistakes resulted in the recording of notional profits and distorted the bank’s financials. As a preventive step, the bank had already discontinued all internal derivative trading from April 1, 2024. The issue first emerged on March 10, when IndusInd Bank disclosed that mark-to-market (MTM) losses in its derivatives book could impact up to 2.35% of its net worth as of December 2024, amounting to nearly Rs 1,600 crore. The news led to a nearly 25% drop in the bank’s share price from Rs 900 to Rs 686 apiece.
Following the revelation, the bank engaged PwC to quantify the losses initially detected in October 2024. Later, at the direction of the Reserve Bank of India (RBI), global audit firm Grant Thornton Bharat (GTB) was appointed to conduct a forensic investigation to ensure a thorough and conservative assessment of the losses.
