HDFC Bank denies wrongdoing after report on $4.7 million deposit payment

HDFC Bank Ltd on Wednesday rejected “any assumptions of wrongdoing or culpability” after a newspaper report alleged that India’s largest private-sector lender made about ₹45 crore, or about $4.7 million, in payments to a Maharashtra state agency to attract large deposits.

The bank said in a statement to media that it has “robust internal oversight, audit & control processes” and that “all issues are dealt with in accordance with bank’s established norms.” It added that it “strongly reject[s] any assumptions of wrongdoing or culpability based on selective material.”

The response came after The Indian Express reported that an internal vigilance investigation at HDFC Bank found payments to the Maharashtra State Road Development Corp., or MSRDC, had been made as “differential interest” but recorded as marketing expenses linked to a road-safety campaign. Reuters said it could not independently verify the report.

The allegations add to investor scrutiny of HDFC Bank, whose governance has been under market attention since March, when part-time chairman Atanu Chakraborty resigned citing differences over “values and ethics.”

Reuters reported then that Chakraborty referred to “certain happenings and practices” at the bank over the previous two years that were not aligned with his personal values, without giving details.

The Indian Express report, citing internal records, said HDFC Bank paid about ₹45 crore to MSRDC 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.

The report said bank officials had discussed giving MSRDC an effective return of 6.01%, while regular savings account customers were receiving 3.5%.

Press Insider has not independently verified the internal documents cited in the report.

Under Reserve Bank of India rules on deposit interest rates, interest payable on deposits must follow the schedule of rates disclosed in advance. The rules also say rates should not be negotiated between depositors and banks, and must be reasonable, consistent, transparent and available for supervisory review.

The Indian Express report said HDFC Bank’s Audit Committee ordered a formal internal vigilance investigation on 12 March into payments made to MSRDC. It said the payments were routed through four local vendors and described as contributions to a road-safety campaign, even though the bank’s corporate social responsibility team was not used for the program.

The report also alleged gaps in documentation, including lack of material showing the basis for the payments. It said vendor invoices were not properly validated and that a single photograph was attached across three invoices totaling about ₹9 crore.

HDFC Bank’s rebuttal did not address each allegation point by point. The bank framed the report as based on selective material and said its internal review processes follow established norms.

Shares of HDFC Bank fell as much as 2.5% on Wednesday after the report.

The controversy lands at a sensitive time for the lender. Reuters reported earlier this month that law firms reviewing governance issues after Chakraborty’s exit were expected to find no major lapses, a development that could clear the path for the reappointment of Chief Executive Officer Sashidhar Jagdishan. His current term ends in October.

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. The central bank also said it had “no material concerns on record” about the bank’s conduct or governance based on its periodic assessments.

The latest report complicates that reassurance because it brings a specific transaction into public view. If the allegations are substantiated, the case could raise questions about deposit pricing, internal controls, documentation, vendor payments, board oversight and the handling of a state agency relationship.