HDFC Bank penalises top officials, including CEO and CFO, in MSRDC case. Here’s why

HDFC Bank, the country’s largest private sector lender, has fined Sashidhar Jagdishan its MD and CEO and two other top officials, while also issuing warning letters to other employees. The move follows the conclusion of an internal review process pertaining to the arrangement with the Maharashtra State Road Development Corporation (MSRDC) for garnering deposits in 2017 and 2021.

What was the matter?

On May 27, 2026, the Indian Express newspaper published a report alleging that HDFC Bank had made payments worth Rs 45 crore to MSRDC as higher interest for their deposits and that this was disguised under marketing budgets and sponsorships for a road safety drive.

At the time, HDFC Bank had denied any wrongdoing and stated following the report that it continued to maintain sound financial and risk management practices, with robust systems of internal control and oversight.

Last week, three US law firms in separate statements said that they would investigate on behalf of HDFC Bank Limited investors, concerning the company’s possible violations of the federal securities laws. The law firms had pointed that HDFC Bank’s stock price declined $1.02, or 4.1%, to close at $23.78, following the Indian Express news report.

What is the conclusion of the internal review?

The lender stated that based on the findings and recommendation of the special disciplinary committee of independent directors, the board at its meeting held on July 23, 2026, concluded that the conduct of the employees involved constituted business overreach rather than any mala fide action, personal enrichment, or improper motive.

What is the action taken by HDFC Bank?

Even as it didn’t find any mala fide action, HDFC Bank said keeping in view any potential divergence with applicable directions of the Reserve Bank of India and based on the recommendations of the special disciplinary committee of independent directors, the board decided to issue warning letters and penalise its top three officials.

Accordingly, the MD and CEO Sashidhar Jagdishan, Srinivasan Vaidyanathan, and group head (retail assets) Arvind Vohra, have been fined Rs 1 lakh. Warning letters have been issued to remaining employees.