HDFC Bank drops 2.6% on governance lapse allegations

The stock fell as much as 2.9 % intraday to ₹756.60 on the BSE before closing at ₹758.50, wiping out more than ₹31,500 crore in market capitalisation.

Responding to the allegations, HDFC Bank said, “The Bank has robust internal oversight, audit and control processes and systems. All issues are dealt with in accordance with the Bank’s established norms, and full process is always followed before final determination post any internal review. We strongly reject any assumptions of wrongdoing or culpability based on selective material.”

The Indian Express report, citing internal documents and interviews with bank officials, said the bank’s audit committee had ordered an internal vigilance investigation into payments totalling around ₹45 crore made to MSRDC during FY24 and FY25.

According to the report, the payments were allegedly routed through the bank’s marketing department as contributions towards road safety awareness campaigns instead of being directly credited as interest payments. The report alleged that the mechanism was used to compensate MSRDC for a differential interest commitment above the bank’s standard savings deposit rates, potentially raising regulatory and governance concerns.

The report further said the vigilance probe examined the role of several senior executives, including Managing Director and Chief Executive Officer Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan and Chief Marketing Officer Ravi Santhanam.

The development follows the resignation of former chairman Atanu Chakraborty in March, when he cited “certain happenings and practices within the bank” that were not aligned with his personal values and ethics. Following Chakraborty’s resignation, the Reserve Bank of India had said that, based on its periodic assessment, there were “no material concerns on record” regarding the bank’s governance conduct.