IndusInd Bank Ltd. has begun a process to claw back salary and bonuses from its former chief executive and his deputy, after an internal review flagged misconduct and misreporting.
The IndusInd board has obtained legal opinion on fixing staff accountability on the basis of its own internal code of conduct and according to guidelines put out by the Reserve Bank of India, Reuters reported citing sources. The board views the IndusInd fraud case as one of “accounting misstatements, regulatory sanction, failure of internal controls and compliance, leading to breach of rules, regulations and damage to the bank”.
IndusInd Bank’s publicly available code of conduct regards such acts as constituting “misconduct, necessitating disciplinary action”.
The clawback could cover the period between December 2023 and March 2025, this person said. Reuters could not determine the amount of clawback or whether additional officials could face such action.
To deter misconduct, India’s banking regulations allow clawback provisions in employee contracts since 2019, but such efforts have been rare, with just two known instances since. Employees can challenge such actions legally.
IndusInd Bank fraud case
IndusInd Bank had earlier this year disclosed incorrect accounting on derivative trades that prompted a $230-million (about ₹2,000 crore) hit to its accounts. That resulted in the exit of former CEO Sumant Kathpalia and deputy CEO Arun Khurana in May. The duo are barred them from securities markets until India’s market regulator SEBI completes its investigation of accusations of their insider trading.
According to IndusInd Bank’s annual report for Fiscal 2025, Kathpalia’s total fixed salary was ₹7.5 crore and he exercised 248,000 stock options. Khurana’s total fixed salary was ₹5 crore.
When contacted for comment on the clawback, Khurana told Reuters in a text message that he wasn’t aware of the matter. Kathpalia didn’t respond to an email and SMS. The bank did not respond to an email seeking comment.
What next for IndusInd Bank?
Earlier in November, IndusInd Bank’s new CEO Rajiv Anand told Reuters that the private lender was carrying out an internal accountability exercise.
Apart from that, IndusInd Bank has commenced an organisational overhaul that’ll be completed before the new financial year begins on 1 April 2026. It has also set up an internal panel to tighten financial systems and controls.