Regulatory lapses, governance failures, alleged financial frauds, loan default, and a flurry of accusations and counter-accusations – India’s banking sector appears increasingly under siege. After the recent turmoil at IndusInd Bank and New India Cooperative Bank, the spotlight has now turned to the country’s largest private lender: HDFC Bank.
Over the weekend, HDFC Bank confirmed that an FIR has been lodged against its Managing Director and CEO Sashidhar Jagdishan over his alleged involvement in a series of financial frauds. The claim, however, was denied by the Bank.
Interestingly, the FIR was filed by a certain Mehta family who had defaulted on a bank loan provided back in 1995. HDFC Bank had informed the stock exchanges of the case on Sunday evening and vowed to continue all lawful remedies to recover the dues from the defaulter.
Here’s what happened?
The Lilavati Hospital trust called for punitive action against HDFC Bank CEO Sashidhar Jagdishan for financial fraud. The Lilavati Kirtilal Mehta Medical Trust produced handwritten diary entries as evidence accusing the top executive of accepting a significant sum of money to harass the father of a trust member
A report by NDTV stated that LKMM has levelled charges against eight people including former officer bearers who allegedly embezzled funds. On Saturday, members of the trust told a Mumbai court that they were calling for the top executive to be suspended and prosecuted on the basis of a court order and FIR filed last week. The list of charges against the group include allegations of financial fraud, criminal conspiracy, abuse of fiduciary position, evidence tampering and obstruction of justice.
According to the complaint, Sashidhar Jagdishan is alleged to have received Rs 2.05 crore from a former trust member to target the father of a current trustee. The petitioners claim that this transaction was documented in a handwritten diary, which was later recovered by the present trustees of the Lilavati Kirtilal Mehta Medical Trust (LKMM).
In a separate statement, the Trust invoked the Reserve Bank of India’s “Fit and Proper” guidelines, asserting that Jagdishan’s role as CEO violates these regulatory norms. They accused him of involvement in a conspiracy, corruption, and breach of trust, further alleging that his continued leadership poses a serious threat of tampering with evidence, influencing the institution, and intimidating potential witnesses.
A loan defaulter trying to distract the recovery process?
Now in response to the FIR, HDFC Bank has defended its CEO and other senior officials and said that they are being targeted by unscrupulous persons who are abusing the legal process to thwart the recovery of the long outstanding loan due to the Bank. The Bank disclosed that Trustee Prashant Mehta and his family members allegedly owe substantial sums to HDFC Bank, which have remained unpaid for over two decades.
HDFC Bank said that the Splendour Gems Limited, owned by the Mehta family, was granted a loan in 1995 by the private sector lender along with the other consortium banks, which was defaulted in 2001.
Despite a recovery certificate issued by the Debt Recovery Tribunal in 2004 and subsequent enforcement actions, HDFC Bank said, the dues remain substantially unpaid. “Splendour Gems Limited also has been borrowing from other Banks / institutions,” it indeed. It is to be noted here that the outstanding dues towards HDFC Bank, including interest, amount to approximately Rs 65.22 crore as on May 31, 2025.
On the legal actions initiated by Mehta family, HDFC Bank believes that “these allegations are retaliatory in nature and have mala fide intention solely at evading repayment of long-standing dues”.
‘FIR malicious and baseless’
In a regulatory filing, the bank called the FIR “malicious and baseless,” asserting that it was “a gross misuse of the legal process.”
It added, “The Bank firmly believes that these actions are a deliberate attempt to obstruct and undermine legitimate recovery proceedings related to substantial long-outstanding dues owed by Splendour Gems Limited.”
About the most recent allegations, HDFC Bank said that Mehta family, having exhausted all leg avenues without success, have now resorted to “launching personal attacks against the Bank and its MD & CEO in a clear attempt to malign their reputation and intimidate the Bank into halting its recovery actions”.
HDFC Bank, meanwhile, will continue to pursue all lawful remedies to recover public funds and address the retaliatory actions taken by the Mehta family.
To conclude…
This unfolding saga raises deeper questions about regulatory oversight, governance standards, and the weaponisation of legal processes in India’s banking ecosystem. As the courts examine the merits of the case, the controversy could test not just the resilience of HDFC Bank’s leadership but also the RBI’s “fit and proper” framework for top executives in the financial sector.