Sebi bans former IndusInd executives over insider trading allegations

Mumbai: The Securities and Exchange Board of India (Sebi) barred former IndusInd Bank chief executive Sumant Kathpalia, ex-deputy CEO Arun Khurana and three other executives from trading in the securities market over allegations of insider trading related to accounting discrepancies that they knew about more than a year before they were revealed to other shareholders and the public.

The regulator also impounded a total of about ₹19.8 crore from the five individuals in recompense for notional gains made from the unpublished price sensitive information they were in possession of. Sebi conducted a suo motu preliminary examination after IndusInd Bank stock plunged on March 10 following its announcement on the accounting matter. The regulator alleged that Kathpalia and others were aware of the discrepancy as early as November 2023.

The other three barred by Sebi are Sushant Sourav, head of treasury; Rohan Jathanna, head of GMG (global markets group) operations; and Anil Marco Rao, chief administrative officer for consumer banking.


The regulator said investigations are ongoing into others who may have been aware of discussions on discrepancies.

Sebi alleged the executives traded in IndusInd shares while knowing about the accounting discrepancy in the derivative portfolio worth ₹1,529 crore.

Failure to Disclose
Sebi said Kathpalia sold 125,000 shares and Khurana sold 348,000 shares while in possession of inside information. The regulator said there is no evidence to suggest that the information relating to the discrepancies was generally available to the public before March 10, 2025.

"It would be naive to assume that the noticees (Kathpalia and others) traded in the scrip of IndusInd Bank while being in possession of unpublished price sensitive information (UPSI) in a routine manner, when discussions were being carried out related to huge impact of discrepancies on financials of IndusInd Bank and noticees were aware of the same," said Sebi whole-time member Kamlesh Varshney in his ex-parte interim order. The five have been given 21 days to respond to the order.

The regulator cited December 4, 2023, email exchanges showing that top executives were aware of the impact that the news of the discrepancies would have.

Sebi has taken into account the period between the latter date and March 10 this year, when the matter was actually reported to the stock exchanges, as the UPSI period. The bank failed to classify this information as UPSI until March 4, 2025, Sebi said.

According to the order, the Rs 19.8 crore impounded from the five individuals is equal to the losses they avoided by selling before the share price fell by 27% after the bank disclosed the discrepancy to the stock exchanges.

"The issue related to discrepancies was raised by the CFO (chief financial officer) in November 2023," according to Sebi. "It prima facie appeared that a significant opportunity to remediate and report this information related to discrepancies much earlier than the disclosure issued on 10 March 2025, was lost over a period of five quarters starting Q3 of FY24. This issue related to failure to disclose is under examination."