Crisis-hit IndusInd Bank appoints Rajiv Anand as new MD, CEO

IndusInd Bank has appointed Rajiv Anand as its new Managing Director and CEO for a three-year term, effective August 25, 2025. This move fills a vacancy left by the resignation of former MD & CEO Sumant Kathpalia on April 29, which followed the discovery of significant unaccounted derivative losses at the bank.

Anand, who previously served as Deputy Managing Director at Axis Bank, brings more than 35 years of experience in the banking and financial services sector. His expertise spans retail and corporate banking, capital markets, treasury, and asset management. According to a bank statement, his appointment reflects a commitment to quickly find a leader with strong ethics and the right skills.

The leadership change comes after the Reserve Bank of India (RBI) flagged irregularities in the bank’s accounting practices, which led to derivative losses of ₹1,960 crore. The bank had been using a mismatched accounting method for internal and external derivative trades, allowing it to delay recognizing losses internally while booking gains externally, thereby overstating its earnings.

After the discrepancies grew in 2023, the RBI intervened, mandating an internal review and eventually banning internal derivative trading by banks in March 2024. While the bank’s own probes by EY and PwC were unsuccessful, an RBI investigation in February 2025 ultimately uncovered the full extent of the losses.

Derivative crisis

IndusInd Bank’s derivative crisis stemmed from irregularities in the accounting of derivative transactions, which were initially detected by the Reserve Bank of India (RBI). The bank had been using a flawed accounting method for its internal trades, which were meant to hedge foreign currency exposures. While external trades were marked to market, the internal trades were not, leading to an accounting mismatch that allowed the bank to defer losses and prematurely book gains.

This discrepancy accumulated over a period of five to seven years. The issue came to light during a review of the bank’s derivatives book in compliance with the RBI’s Master Direction issued in September 2023. An explainer on Insolvency Tracker noted that the cumulative impact of these discrepancies was estimated to be a 2.35% reduction in the bank’s net worth as of December 2024, which translates to approximately ₹2,100 crore.

In response to the growing issue, the RBI intervened, directing the bank to conduct an internal review. By March 2024, the RBI banned internal derivative trading by banks. An RBI investigation team ultimately uncovered the full extent of the losses in February 2025. Following the crisis, IndusInd Bank has discontinued all internal trades and implemented stricter controls to prevent similar issues in the future. A Moody’s report on the website noted that the accounting discrepancies pointed to weaknesses in the bank’s risk management and governance, leading the rating agency to place the bank’s baseline credit assessment under review for a downgrade.

Also Read: Explainer: IndusInd Bank derivative loss – what happened and what it means