Shares of India’s private lender fell for a second session in a row, now down 5% in two sessions after a newspaper report said that the lender’s Audit Committee had ordered a formal “Internal Vigilance Investigation” into payments totalling Rs 45 crore to a PSU disguised as marketing spend.
The lender issued a clarification stating: We wish to state that in line with the highest corporate governance standards of the Bank, the Internal Audit function conducts reviews, identifies and presents its observations from time to time. As such, the observations of Internal Audit function are comprehensively addressed by the Bank and that applies to the matter in question.
“HDFC Bank continues to maintain sound financial and risk management practices, with robust systems of internal control and oversight. We remain committed to the highest standards of corporate governance and regulatory compliance,” the regulatory filing added.
A report in The Indian Express said the payments were allegedly made to the Maharashtra State Road Development Corporation (MSRDC), a state government agency, just days before former chairman Atanu Chakraborty resigned on March 18.
This order came after an internal audit of the bank’s marketing department, covering the FY25 period, flagged these payments and rated the department’s performance as “unsatisfactory,” the report said.
The Indian Express investigation, based on internal records, found that the payments were intended for Maharashtra State Road Development Corporation as “differential interest”, or interest paid above the specified rate on its deposits. However, instead of being directly credited to MSRDC’s account as interest income, the funds were allegedly routed through the bank’s marketing department and shown as contributions towards a road safety awareness campaign via four local vendors.
Records reviewed during the probe also indicate that the payout was approved during senior-level discussions attended by Sashidhar Jagdishan. According to testimonies by several officials in the internal investigation, Jagdishan participated in calls convened to examine ways the bank could compensate MSRDC and was part of the decision to route the differential interest through the marketing budget as a one-time arrangement.
HDFC Bank Chief Marketing Officer Ravi Santhanam acknowledged in his testimony during the Vigilance probe that the marketing department acted as a “facilitator to camouflage differential interest reimbursement as marketing spend”.
Significantly, the Vigilance probe report was sent to two top committees: Audit Committee of the Board (ACB) on April 10, and the Nomination and Remuneration Committee of the board a week later, the media report said.
On March 18, part-time Chairman and independent director Atanu Chakraborty tendered his resignation. In his letter, Chakraborty pointed to certain developments and practices within the bank over the past two years that did not align with his personal values and ethics. “This is the basis of my aforementioned decision,” he wrote.
Since the development, HDFC Bank shares are down nearly 8%. The stock has slipped 23% in 2026.
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