HDFC Bank has strongly denied allegations of wrongdoing following an investigative report claiming the country's largest private sector lender disguised ₹45 crore in differential interest payments to Maharashtra State Road Development Corp (MSRDC) as marketing expenditure on a road safety awareness campaign. According to reports from The Indian Express, the bank emphasized its robust internal oversight, audit and control processes, stating that all issues are dealt with in accordance with established norms and full process is always followed before final determination post any internal review. The bank's response came after The Indian Express reported that an internal vigilance investigation at HDFC Bank found payments to the Maharashtra State Road Development Corp had been made as "differential interest" but recorded as marketing expenses linked to a road-safety campaign.
The investigative report, citing internal bank documents and vigilance probe findings, alleged that HDFC Bank had promised MSRDC a 6.01% return on its savings deposits, well above the standard rate. As reported by The Indian Express, when it could no longer offer this through normal channels, senior management allegedly devised an arrangement to route the differential interest through the marketing department via four local vendors. The report named MD and CEO Sashidhar Jagdishan, CFO Srinivasan Vaidyanathan and Chief Marketing Officer Ravi Santhanam as being allegedly involved in the arrangement. The payments were made across FY24 and FY25 after an arrangement to secure large savings deposits from the state infrastructure agency did not generate the expected level of funds. Bank officials had discussed giving MSRDC an effective return of 6.01%, while regular savings account customers were receiving 3.5%.
Shares of HDFC Bank fell as much as 1.94% in early trade on May 27, 2026, dropping to ₹763.80 as investors reacted to the internal vigilance probe findings. According to The Indian Express, the controversy lands at a sensitive time for the bank as it faces governance questions following former non-executive chairman Atanu Chakraborty's resignation on March 18. The bank has since appointed domestic and international law firms to conduct independent review of circumstances surrounding his departure, with Reuters reporting that these law firms were expected to find no major lapses, which could clear the path for CEO Sashidhar Jagdishan's reappointment whose current term ends in October. Market sentiment has turned cautious as the probe alleges knowledge by top management, including the CEO, creating concerns about the bank's compliance reputation.
The report comes in the backdrop of former non-executive chairman Atanu Chakraborty's resignation on March 18, citing certain practices 'not in congruence' with his personal values and ethics. As reported by The Indian Express, in his resignation letter filed to the stock exchanges, Chakraborty had cited certain happenings and practices at the bank over the previous two years that were not aligned with his personal values, though he did not specify details at the time. The RBI had moved quickly after Chakraborty's resignation to calm markets, saying HDFC Bank was a domestic systemically important bank with sound financials, a professionally run board and competent management, adding it had "no material concerns on record" about the bank's conduct or governance based on its periodic assessments. The bank recently recommended a final dividend of ₹13.00 per share for FY26.
