SEBI Restricts Former IndusInd Bank CEO and Executives from Securities Market

The Securities and Exchange Board of India (SEBI) has issued a sweeping interim order barring former IndusInd Bank CEO Sumant Kathpalia and four other senior executives from participating in the securities market, following allegations of insider trading linked to a major accounting scandal at the private lender.

 

Key Highlights:

 

SEBI’s ban covers Sumant Kathpalia (ex-CEO), Arun Khurana (former Executive Director and Deputy CEO), Sushant Sourav (Head of Treasury Operations), Rohan Jathanna (Head of GMG Operations), and Anil Marco Rao (Chief Administrative Officer – Consumer Banking Operations).

 

All five are prohibited from buying, selling, or dealing in securities—directly or indirectly—until further notice, pending a final investigation.

 

The action follows SEBI’s probe into trades executed by these executives while in possession of unpublished price-sensitive information (UPSI) about significant accounting discrepancies at IndusInd Bank.

 

SEBI’s investigation revealed that the officials sold large volumes of IndusInd Bank shares between December 2023 and March 2025, before the public disclosure of a derivatives portfolio misstatement and other irregularities.

 

The regulator has impounded a total of ₹19.78 crore, the notional gains allegedly made by the five individuals through these trades.

 

The accounting scandal, which came to light in March 2025, involved misreporting worth over ₹1,500 crore in derivatives and additional misstatements in the bank’s microfinance portfolio, raising concerns about internal controls.

 

SEBI’s order also freezes the personal bank and demat accounts of the accused to the extent of the alleged gains and directs them to deposit the amount in fixed deposits under SEBI’s lien.

 

The Reserve Bank of India (RBI) is handling the banking side of the irregularities, while SEBI continues its independent probe into securities market violations.

 

The accused have 21 days to respond to SEBI’s order and may request a personal hearing.

 

This decisive action underscores SEBI’s commitment to upholding market integrity and signals strict consequences for insider trading and governance lapses in India’s financial sector.

 

Source: NDTV Profit, Business Standard, Business Today, News18, Rediff