3 min readMumbaiUpdated: Jul 28, 2026 11:04 AM IST
The board of HDFC Bank, India’s largest private sector lender, on Monday decided to issue warning letters and imposed a monetary penalty of Rs 1 lakh on three senior employees. They are Managing Director (MD) and Chief Executive Officer (CEO) Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan, and Group Head of Retail Assets Arvind Vohra.
The action follows the conclusion of an internal review process pertaining to the bank’s arrangement with the Maharashtra State Road Development Corporation (MSRDC) for garnering deposits in 2017 and 2021.
Based on the findings and recommendation of the Special Disciplinary Committee of Independent Directors, the board at its meeting held on July 23 concluded that the conduct of the employees involved constituted business overreach rather than any mala fide action, personal enrichment, or improper motive, the bank said in an exchange filing.
“Keeping in view any potential divergence with the applicable RBI Directions and based on the recommendations of the Special Disciplinary Committee of Independent Directors, the Board decided to issue warning letters and monetary penalty of Rs one lakh for three senior employees and warning letters for the remaining employees,” it said. The board further directed that the matter be communicated to the Reserve Bank of India (RBI).
Interest payments disguised as marketing spend
On May 27, The Indian Express reported that the lender had conducted an internal vigilance investigation into interest payments of Rs 45 crore, “camouflaged” as marketing expenditure, made to MSRDC for 2023-24 and 2024-25. The report further pointed that the internal investigation was ordered on March 12 by the Audit Committee of the board, just six days before Atanu Chakraborty abruptly resigned as the bank’s part-time chairman, saying “certain happenings and practices within the bank are not in congruence with my personal values and ethics”.
Internal records accessed by the newspaper revealed that the payout was approved in the presence of the bank’s MD and CEO Sashidhar Jagdishan. However, the bank has publicly denied these allegations.
The internal audit of the bank’s marketing department had flagged these payments and rated the department’s performance as “unsatisfactory,” investigation by The Indian Express showed. These payments were disguised as contributions to a road safety awareness campaign through local vendors.
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Three US-based law firms — Howard G. Smith, Frank R. Cruz and Glancy Prongay & Murray LLP — have launched investigations into HDFC Bank over the MSRDC deposit case. The firms have urged US investors who suffered losses following the sharp decline in HDFC Bank’s stock price after the news broke to contact them. HDFC Bank’s American Depositary Receipt (ADR) fell by $1.02, or 4.1%, to close at $23.78 per share on 27 May 2026, resulting in losses for investors.
Jagdishan’s current tenure as MD and CEO of HDFC Bank is scheduled to end on October 26, 2026. His current three-year term began on October 27, 2023 after receiving approval from the RBI. The bank has not yet formally announced his reappointment for another term.
Governance issues, ethics
On March 18, HDFC Bank Part-time Chairman Chakraborty resigned with immediate effect, saying that “certain happenings and practices within the bank are not in congruence with my personal values and ethics”. Six days later, HDFC Bank announced that the board of directors appointed external law firms — domestic and international — to review the points highlighted by Chakraborty in his resignation letter.
