In its order, Sebi has frozen the bank accounts and demat accounts of the five individuals to the extent of their gains. It has also barred them from buying or selling securities until further notice. The bank and its executives have been asked to submit a detailed account of their financial and asset holdings within 15 days.
The case centres around a discrepancies in IndusInd Bank’s derivative portfolio. The issue first surfaced internally in late 2023, following a new RBI direction on derivative accounting.
Sebi’s order reveals that internal emails among top officials showed the bank had estimated an adverse financial impact of Rs 1,572 crore, about 2.35% of its net worth, by December 2023. However, this information was not disclosed to the stock exchanges until March 10, 2025.
Following the disclosure, IndusInd Bank’s share price crashed 27% in a single day, dropping from Rs 900.60 to Rs 655.95. Sebi’s preliminary investigation found that key individuals — Sumant Kathpalia (former MD & CEO), Arun Khurana (Deputy CEO), and three other senior executives — sold large quantities of shares just before the public announcement.
Kathpalia alone offloaded 1.25 lakh shares, while Khurana sold over 3.48 lakh shares during the UPSI period. SEBI noted that none of these trades were pre-planned or disclosed under any trading plan.According to Sebi, the insiders took advantage of their access to sensitive financial data which had not yet been made public. By selling shares ahead of the announcement, they avoided significant losses as the stock’s price tumbled. The regulator has calculated the total loss avoided at over Rs 19.78 crore.The regulator stated that the matter is still under detailed investigation, including potential disclosure violations and examination of other suspects. Sebi said this action was necessary to protect investor confidence and ensure that the securities market remains fair and transparent.
