The Supreme Court is examining an appeal by Lilavati Kirtilal Mehta Medical Trust that challenges the Bombay High Court's order quashing a bribery case against HDFC Bank MD and CEO Sashidhar Jagdishan. According to The Economic Times, the trust that runs Mumbai's Lilavati Hospital had accused Jagdishan of accepting ₹2.05 crore to help the Chetan Mehta Group retain illegal and undue control over the trust's governance. A bench comprising Justices MM Sundresh and Nongmeikapam Kotiswar Singh issued notice to Jagdishan while refusing to interfere with the broader findings of the high court that quashed the FIR. However, the court noted that allegations regarding any personal benefit derived by specific individuals may still require examination.
HDFC Bank shares extended their decline for the third consecutive session on Friday, falling as much as 1.31% to ₹748.50 on the BSE. According to reports from Livemint, the stock has declined more than 5% in three sessions and has fallen over 14% in three months. The private lender's shares have declined 23% on a year-to-date basis, dropped 21% in one year, and fallen 7% in three years. At 10:40 AM, HDFC Bank was trading 0.16% lower at ₹757.25 on the BSE.
The recent decline in HDFC Bank share price came after a media report earlier this week alleged that the private lender conducted an internal vigilance investigation into interest payments worth ₹45 crore made to a state transport firm. As reported by The Indian Express, the internal vigilance probe examined "differential interest" payments amounting to ₹45 crore made to the Maharashtra State Road Development Corporation (MSRDC). The report claimed that the payments were allegedly structured as 'differential interest' linked to deposits from MSRDC, with the money routed through the bank's marketing department and shown as contributions towards a road safety awareness campaign involving local vendors.
Responding to the allegations, HDFC Bank issued a statement defending its governance framework and internal processes. According to Livemint, the bank stated that in line with the highest corporate governance standards, the Internal Audit function conducts reviews and identifies observations from time to time, which are comprehensively addressed by the bank. HDFC Bank added that this matter did not have a material impact on the financial statements and the internal controls were robust. Senior counsel Mukul Rohatgi, appearing for HDFC Bank, defended the bank's position, stating that the FIR was the fallout of a long-running dispute between factions of the Mehta family and recovery proceedings initiated by the bank. He emphasized that HDFC Bank and its CEO were being drawn into internal disputes within the trust, adding that the allegations lacked any substantive material.
Analysts believe that the allegations, if substantiated, are likely to be viewed by markets as a governance and disclosure overhang rather than a one-off accounting issue. As reported by Livemint, Avinash Gorakshakar, market expert and private wealth management consultant, noted that HDFC Bank stock may face valuation compression as investors typically discount banks more sharply when questions arise over internal controls, expense classification, and management discipline. He emphasized that credibility recovery will matter as much as earnings delivery for the bank's recovery.
