HDFC Bank board to have ‘zero tolerance’ for unethical practices: Chairman Rajiv Kumar

The bank has demonstrated that it has control systems/guard rails in place to identify deviations, if any and the oversight at committee levels is strong, Kumar said. “Let me reiterate, on my behalf and on behalf of the board, that the bank is fundamentally strong, with a pristine balance sheet,” he said.

“I appeal to all (employees) to put their best foot forward, take the bank to newer heights, and set even higher standards of ethical governance. Needless to add that, a policy of no tolerance, repeat no tolerance towards any kind of deviation from established policy regime will be followed,” he told the shareholders.

Governance concerns

On March 18, HDFC Bank’s part-time chairman Chakraborty resigned with immediate effect, citing that certain happenings and practices within the bank were not in congruence with his 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.

Giving a “clean chit” to the bank, the law firms — Wilson Sonsini Goodrich & Rosati, PC and Wadia Ghandy & Co — said the contemporaneous evidence reviewed was inconsistent with Chakraborty’s statement, and law firms’ review did not identify any basis for the statement.

On May 27, The Indian Express reported that HDFC Bank 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.

On July 27, the board decided to issue warning letters and impose a penalty of Rs 1 lakh each for three senior employees following an internal review of the arrangement with MSRDC for deposits in 2017 and 2021. The employees under the scanner are Managing Director and CEO Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan and Group Head of Retail Assets Arvind Vohra.