By Saloni Shukla

Copyright indiatimes

Gobind Jain, whistleblower and former chief financial officer, IndusInd Bank, has told Mumbai’s Economic Offences Wing (EoW) that accounting irregularities in the bank’s derivatives portfolio date back to 2015, and that the then board, senior management and former finance chief SV Zaregaonkar were aware of the issue.In his submissions, Jain provided multiple documents, including four resignation letters— beginning April 2024 — where he repeatedly urged then managing director and chief executive Sumant Kathpalia to appoint an external auditor to probe the alleged lapses. He also furnished an email dated December 1, 2021, in which Zaregaonkar told Kathpalia that accounting losses from derivatives MTM hits could touch Rs 700 crore. ET has reviewed a copy of these documents.A spokesperson for IndusInd Bank said the lender has made disclosures relating to suspicions of fraud involving certain employees and that appropriate steps in accordance with applicable laws were being taken. “The matters have been reported as ‘fraud’ to the Reserve Bank of India and complaints have been filed with relevant law enforcement agencies,” it said. Jain, Kathpalia, lender’s former deputy chief executive Arun Khurana and Zaregaonkar did not respond to queries. The earliest of Jain’s resignation letters was sent on June 11, 2024—almost 10 months before the bank disclosed the accounting lapses to the exchanges. People in the know said Jain stepped down immediately. Insider Trading ClaimsGobind Jain did not want to sign off on the June quarter accounts last year. “I am writing to tell you about my resignation as chief financial officer effective immediately,” Jain wrote to Kathpalia at the time. Kathpalia, however, put the resignation on hold. Several IndusInd Bank officials quizzed by EoW have also alleged that senior executives, including Kathpalia and Khurana, engaged in insider trading and offloaded shares after Jain pressed them to recognise the derivatives losses.Live EventsThe EoW is examining how, during the same period, Kathpalia and Khurana sold shares worth Rs 157 crore. According to BSE insider trading data, Kathpalia sold nearly 9.5 lakh shares valued at Rs 134 crore between May 24, 2023, and June 25, 2024. Khurana sold 5.5 lakh shares worth Rs 82 crore during 2023–24. Less than two months after his first resignation, Jain sent another letter on August 20, 2024. “Basis our recent conversations, I feel uncomfortable in continuing further,” Jain wrote. “I would be keen to seek opportunities outside and I am happy to discuss the way forward.”On September 29, he again pressed for an external audit. “You may recall that I had resigned from the services of the bank on June 11, 2024 and as suggested by you I had kept my resignation on hold, on an agreed understanding that you would order a detailed audit by a reputed external and independent audit firm in the matter of serious issues, incorrect procedures and practices followed by the bank’s treasury,” Jain wrote. He added: “Unfortunately, in spite of clear understanding the audit has not started, and the issues still remain. I am convinced that an audit will help in unravelling these issues. In my view the bank has no choice but to take corrective action and make necessary provisions for these losses, basis the finding of an audit.”In the same letter, Jain raised concerns about personal liability. “As I hold a statutory position the lack of any action has put me in a seemingly untenable and risky position,” he wrote. “I have reason to believe that unless I communicate with those charged with governance my continuation will seriously affect me and my unblemished career. Under the above circumstances, that I want to go ahead with my decision of resigning from the services of the bank.”The following day, September 30, Jain again pressed Kathpalia. “I have told you earlier and repeat again that I will be compelled to resign if the proposed audit with PwC is not undertaken,” he said. “While Arun (Khurana) chose PwC to have a close look at the transition between old Calypso and new version, for me the real issue is to confirm that there are no accounting gaps or anomalies passed through Calypso and flowing into our general ledger. I need the comfort both for myself and the bank to ensure that the financial accounting is in order. We have agreed that the engagement letter to PwC will be issued today. Request that we complete the audit post haste so that any steps arising from the audit can be handled as well.”Those aware of developments said Jain had also informed the EoW that the bank had violated Sebi’s Listing Obligations and Disclosure Requirements (LODR), which mandate that listed companies disclose resignations of key officials. His resignation was finally accepted on January 17, this year, though he is yet to receive a relieving letter.On March 10, 2025, IndusInd Bank disclosed that it could face a hit of Rs 1,577 crore due to discrepancies in its derivatives transactions spanning five to seven years. After multiple audits, the bank recognised nearly Rs 2,000 crore of one-time losses in its March quarter earnings.Add as a Reliable and Trusted News Source Add Now!
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