New Delhi: The Hinduja-promoted IndusInd Bank is back at the centre of another controversy after a whistleblower exposed an internal vigilance committee’s report that indicts one of its former zonal heads of insider trading.More importantly, The Wire has come to know that in spite of having all the necessary confirmation on unauthorised trades and insider trading – in which the former zonal head’s family undertook unauthorised trades of Rs 816 crore and booked a profit of Rs 53.15 crore, inclusive of insider trading profit of nearly Rs 36.1 crore – the bank’s leadership has not informed the Securities and Exchange Board of India (Sebi) and the stock exchange about it, as mandated by the regulations, in what the whistleblower has called a massive cover-up exercise.The bank’s internal vigilance report on October 12, 2024, revealed that Samir Agarwal, the then Zonal Head of eastern India used his family members’ accounts and based on insider information, traded in equity shares of Kesoram Industries and other companies that were part of the bank’s loan portfolio.Agarwal, the report noted, made a net gain of Rs 36.06 crore from stocks of companies that were part of the bank’s loan portfolio that he directly managed. Out of this, Agarwal booked a profit of Rs 7.6 crore from his own account, while the remaining profit came from accounts of his family members.The report also said that Agarwal and his family’s total net gains from unauthorised trades was Rs 53.15 crore, and these included also stocks of companies which were not part of the bank’s portfolio but trading in which required the bank’s permission.IndusInd Bank’s chief internal vigilance report shows the profit made by Agarwal and his family members.The bank’s vigilance committee found that “the zonal head” – Agarwal – “was privy to sensitive information pertaining to the strategic sale transaction (of Kesoram Industries) before the same was available in public domain” and that “the information was shared on ‘very confidential basis’” with the zonal head overseeing the bank’s borrower entities.What has made the matter even murkier is that in spite of the bank’s vigilance report confirming insider trading, the bank has let Agarwal go without any action. It has not reported the alleged insider trading to Sebi or the stock exchange, raising questions about whether the price-sensitive information accessed by Agarwal was known to more personnel in the bank.Agarwal has claimed that he sent an email to his seniors on November 6, 2023 informing them of the price-sensitive information regarding the acquisition of Kesoram Industries by UltraTech Cement Ltd. The internal vigilance report, which The Wire has seen, holds Agarwal liable for possible insider trading. However, the report does not probe the recipients of Agarwal’s email who may have also accessed the price-sensitive information, raising the question as to whether the bank acted with an apparent intent to let the senior executives off the hook.The Wire had earlier reported on the possibility of such an alleged cover up when the IndusInd bank, in a different matter, recorded a fraudulent Asset-Liability Committee (ALCO) meeting to back-date certain derivative transactions to increase net interest income by Rs 153 crore for the financial year 2025.Agarwal’s insider tradingNow that a whistleblower has pointed towards another alleged case of misconduct, the IndusInd bank is under scrutiny again.In the minutes of the 256th Audit Committee meeting on December 5, 2024, in which chairman of the board Sunil Mehta, CEO Sumant Kathpalia, chief of human resources Zubin Mody, amongst other senior executives, were present, the IndusInd Bank discussed the alleged insider trades of Agarwal and his family. Sunil Mehta requested that the time period of analysing Agarwal family’s demat statements be broadened and extended to get a deeper insight into the trading. This request was also supported by Bhavna Doshi, the chairperson of the Audit Committee.The above email screenshot acknowledges that Anand Das, company secretary, copied the email to all IndusInd Bank audit committee members.Following the meeting, Doshi, on December 5, 2024, asked the bank’s company secretary Anand Das in an email marked to all Audit Committee members, board chairman Sunil Mehta, and the senior management on whether Agarwal is a “designated person” whose misconduct should be reported to Sebi. Das responded by attaching legal correspondence from the law firm S&R Associates saying that since Agarwal was a Zonal Head, he is indeed a “designated person”, and “falls under the purview of ‘Insider’/connected person as per SEBI PIT Regulations, 2015 read with Bank’s Insider Trading Code.”A screenshot of emails that show that Agarwal is acknowledged as a “designated person”. Note that the screengrab is blurry.Under Section 15G of SEBI Act, 1992 the penalty for insider trading can extend to Rs 25 crore or 3 times the amount of profits made whichever is higher. As per Section 24 of SEBI Act, 1992 any person who contravenes or attempts to contravene the regulation can be punished with imprisonment for a term up to 10 years (or, in some context of failure to pay penalties, a minimum of 1 month up to 10 years).However, in spite of Das’s confirmation, the bank allowed Agarwal to leave his job (on or before March 31, 2025) without informing Sebi or the stock exchange, pointing towards the fact that the bank’s leadership overlooked the view of the company secretary, who is also the Compliance Officer.It now turns out that Doshi, who was the chairperson of the Audit Committee, herself had to pay a fine of Rs 5 lakh for trading in IndusInd Bank shares that in a Memorandum to the Board of Directors on June 28, 2024 was deemed as insider shares. Even in that case, the bank reported Doshi’s misconduct to Sebi nearly a month later on July 19, 2024, even when SEBI’s PIT regulations stipulated that stock exchanges needed to be informed about such misconduct within two days.The IndusInd Bank refrained from responding to any of the questions regarding its failure to report Agarwal’s alleged misconduct to Sebi and the stock exchange. It did not respond to The Wire’s question on why senior executives who were recipients of Agarwal’s email about price-sensitive information on Kesoram Industries were not probed. The bank also refused to respond to any queries regarding recovery of this amount from Agarwal and what happened to it.The bank’s only response was regarding Doshi’s insider trading which was reported to Sebi. “The Bank has already made the necessary disclosure in July 2024 regarding the insider trading matters relating to Ms. Bhavna Doshi. A copy of the disclosure is attached for your reference. The Bank investigates insider trading allegations as soon as it becomes aware, and takes appropriate actions based on the Bank’s internal policies. In this regard, the Bank has made, and will continue to make, disclosures as required under law,” the IndusInd bank told The Wire.