HDFC Bank’s shares experienced a dip on Wednesday after a newspaper report alleged that the bank made illegal payments to the Maharashtra State Road Development Corporation to secure large deposits, raising concerns about corporate governance.
IMAGE: The HDFC Bank headquarters in Mumbai. Photograph: Shailesh Andrade/Reuters
Key Points
- HDFC Bank shares dropped over 2% after a newspaper report alleged disguised payments to MSRDC for deposits.
- The bank reportedly paid approximately Rs 45 crore to MSRDC, characterised internally as ‘disguised interest compensation’.
- Payments were allegedly routed through marketing department vendors as sponsorship for a road safety drive, bypassing the CSR team.
HDFC Bank shares were trading 2.48 percent lower on Wednesday, May 27, 2026, afternoon after The Indian Express newspaper reported that the bank made illegal payments to the Maharashtra State Road Development Corporation (MSRDC) to attract deposits.
According to the newspaper report, HDFC Bank in 2021 pitched for the MSRDC account for deposits.
MSRDC in turn told HDFC Bank that it would deposit Rs 25,000 crore from its land acquisition fund.
MSRDC told HDFC Bank it was getting 6% interest on their deposit from other banks.
This put HDFC Bank in a spot, and to attract such a huge deposit HDFC Bank agreed to pay MSRDC 6.01% interest to beat the competition.
Following this, in February 2022, MSRDC started placing its deposits with HDFC Bank.
However, the deposits never reached the anticipated scale of Rs 25,000 crore, touching only Rs 3,000 crore, and that too only for a couple of months in 2023.
From 2023 through 2025, however, HDFC Bank made a series of payments to MSRDC, aggregating approximately Rs 45 crore in what an internal vigilance report of the bank characterised as disguised interest compensation.
Payment Routing and Market Reaction
The Indian Express report said the bank paid Rs 45 crore in batches through vendors and did not route the money through the bank’s Corporate Social Responsibility team that usually carries out such awareness programmes.
The report said this was done to avoid wrongdoing by HDFC Bank as it paid the money through its marketing department vendors as sponsorship for a road safety drive.
More damningly, the Indian Express report said: ‘Significantly, records reveal that this payout was approved in the presence of HDFC Bank MD & CEO Sashidhar Jagdishan during senior-level discussions where a higher rate for MSRDC was ‘verbally’ agreed upon.’
‘Many officials have testified in the internal probe that Jagdishan ‘participated in the call convened to examine how the bank could compensate MSRDC and was part of the decision to provide the differential interest through the marketing budget’ as a one-off arrangement.’
After publication of the newspaper report, HDFC Bank’s shares were trading at 2.45% lower at ₹759.85 at 2 pm in Mumbai.
HDFC Bank’s shares have fallen by more than 9 percent since March 19, when Atanu Chakraborty abruptly resigned as non-executive chairman raising questions about the bank’s internal governance practices.
While Chakraborty had not made any specific allegations against HDFC Bank at the time of his resignation, he had said that practices at the bank were not in line with his ‘personal’ values and ethics.
Reject assumptions of wrongdoing or culpability, says HDFC Bank
PTI adds: Biggest private sector lender HDFC Bank on Wednesday rejected allegations of wrongdoing linked to reported payments worth Rs 45 crore allegedly routed through its marketing department to a Maharashtra government agency.
The bank’s spokesperson, in a statement, said its internal oversight and audit mechanisms are robust and that all matters are handled as per established procedures.
All issues are dealt with in accordance with the bank’s established norms, and the full process is always followed before final determination post any internal review, the statement said.
“We strongly reject any assumptions of wrongdoing or culpability based on selective material,” the statement added.
The clarification came after media reports claimed that the bank’s audit committee had initiated a formal ‘internal vigilance investigation’ into payments totalling Rs 45 crore to Maharashtra State Road Development Corporation (MSRDC) that were allegedly disguised as marketing expenditure.
Shares of the HDFC Bank closed at Rs 758.50 apiece, down 2.63 per cent, on the BSE.
According to reports, the payments were allegedly made to a Maharashtra government undertaking just days before former chairman Atanu Chakraborty resigned on March 18.
Chakraborty, in a surprise move, resigned as chairman of HDFC Bank, citing ethical concerns, on March 18.
This was the first time that the part-time chairman of HDFC Bank left mid-way, raising concerns over its functioning.
In a regulatory filing, HDFC Bank said Chakraborty had on March 18 tendered his resignation as the part-time chairman and independent director of the bank with immediate effect.
Chakraborty was appointed part-time chairman effective May 5, 2021, almost a year after retirement as Economic Affairs Secretary.
His term was extended for another three years in 2024 till May 4, 2027.
Chakraborty, a 1985 batch IAS officer of Gujarat cadre, retired as Secretary of the Department of Economic Affairs in April 2020. Prior to that, he was Secretary of the Department of Investment and Public Asset Management (DIPAM). Both departments come under the Finance Ministry.
Chakraborty became chairman during the reverse merger process of the bank with the parent entity HDFC Ltd, a leading mortgage firm in the country.
