(Top CEOs at India’s private banks like IndusInd and Kotak Mahindra are stepping down. What’s causing this trend? Here’s everything you need to know.)

CEO Resignations in India’s Private Banks: What’s Going On?

In the first half of 2025, several high-level resignations have rocked India’s private banking sector. Top executives, including CEOs from IndusInd Bank and Kotak Mahindra Bank, have either resigned or stepped down early. This unusual wave of exits has raised serious questions about what’s happening behind closed doors in some of the country’s biggest banks.

From regulatory pressure to internal governance issues, let’s break down the key reasons behind this corporate shake-up and what it means for the future of Indian banking.

🔍 IndusInd Bank’s CEO and Deputy CEO Exit Amid Probe

In April 2025, IndusInd Bank’s CEO Sumant Kathpalia and Deputy CEO Arun Khurana both resigned after the bank reported issues in its derivatives portfolio accounting.

• The financial discrepancy was serious enough to wipe out a large part of the bank’s quarterly profits.
• The issue reportedly stemmed from weak internal controls and pressure to meet aggressive profit targets over the years.
• The Reserve Bank of India (RBI) intervened and, as per reports, asked both executives to resign.
• IndusInd is now setting up an interim executive committee and has hired external agencies to carry out an independent probe.

📌 Source: Reuters Report

🏦 Uday Kotak Steps Down Early from Kotak Mahindra Bank

In September 2024, Uday Kotak, one of India’s most respected banking leaders, resigned as CEO of Kotak Mahindra Bank, four months ahead of his planned retirement.

• Kotak said he stepped down early for a smooth transition and personal reasons.
• His exit also aligns with the RBI’s new CEO tenure rules, which limit bank CEO terms to 15 years.
• Dipak Gupta, the bank’s joint MD, has taken over as interim CEO until a permanent replacement is approved.

📌 Source: Economic Times

📊 Why Are So Many Bank CEOs Stepping Down?

1. RBI’s New Rules and Closer Monitoring

The Reserve Bank of India has become more active in monitoring private banks. It has introduced stricter governance rules, including:

• CEO tenure cap of 15 years
• Closer inspection of accounting and risk practices
• More power to step in during crises

This shift aims to make banks more accountable and transparent, especially after past banking scandals.

2. Governance & Risk Management Issues

Several banks are now facing pressure due to:

• Weak internal checks
• High focus on short-term profits
• Poor risk assessment and controls

In the case of IndusInd, internal red flags were ignored for years, according to insiders.

3. Employee Attrition & Operational Risk

According to a recent RBI report, private banks are also struggling with:

• 25% employee attrition rates
• Disruptions in operations and customer service
• Increased costs in recruitment and training

📌 Related Internal Article: How High Attrition Is Impacting India’s Private Banks (internal link)

4. Succession Planning Gaps

Sudden resignations have also revealed poor succession planning in some banks. Without a clear line of leadership, transitions become uncertain and affect investor confidence.

📈 What This Means for the Banking Industry

This wave of CEO exits isn’t just about individuals — it reflects deeper changes in India’s private banking landscape.

✅ RBI is pushing for cleaner, more responsible banking.

✅ Banks need stronger internal systems to prevent such lapses.

✅ Investors and customers want more transparency and long-term vision.

❓ FAQs on CEO Resignations in Indian Banks

Q1. Why did IndusInd Bank’s top executives resign?

They resigned due to a major accounting issue in the derivatives portfolio. The RBI reportedly pushed for the resignations.

Q2. What caused Uday Kotak’s early exit?

Uday Kotak left early to ensure smooth succession and in line with RBI’s new tenure rules for CEOs.

Q3. What are RBI’s new rules for private banks?

The RBI now limits CEO terms to 15 years and is focusing more on risk controls and transparency.

Q4. Is this trend limited to a few Private Banks?

No. Experts say more leadership changes may happen as RBI tightens oversight and banks restructure.

Q5. How can banks prevent such leadership crises?

Banks need better governance, strong succession plans, and clear compliance policies to avoid sudden exits.

🔚 Final Thoughts

The resignations of top leaders at IndusInd and Kotak Mahindra are not random events. They reflect deeper structural issues in India’s private banking sector. With tighter regulation, high staff turnover, and a call for better governance, banks must act quickly to rebuild trust and maintain stability.

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