HDFC Bank shares in focus after report of lender firing three senior executives

HDFC Bank Ltd, which declined in the previous three sessions, is in focus on Monday morning after the lender reportedly terminated three employees, including senior executives, following an internal investigation into alleged mis-selling of high-risk AT1 bonds to NRI clients through its overseas operations. The action came, as per a report, amid regulatory scrutiny and investor complaints linked to transactions conducted via the bank’s Dubai branch.

The employees were identified as Sampath Kumar, Group Head of Branch Banking, along with two other senior executives, Harsh Gupta, Executive Vice President for Middle East, Africa and NRI onshore business, and Payal Mandhyan, Senior Vice President, CNBC-TV18 reported.

This comes as retail investors lost nearly Rs 9,500 crore in notional wealth as HDFC Bank Ltd amid concerns over part-time Chairman Atanu Chakraborty’s resignation, who cited a "lack of congruence with personal values and ethics" at the lender while resigning. Foreign portfolio investors (FPIs), who held a significant stake in the bank at the end of December quarter, are hit hard.

A total of 35.39 lakh individual investors, holding nominal share capital up to Rs 2 lakhs, owned 9.41 per cent stake in HDFC Bank at the end of December quarter. That stake was worth Rs 1,13,039 crore at Friday's closing against Rs 1,22,512 crore on March 17, down Rs 9,472 crore. 

The private lender is said to have taken the decision after completing a detailed internal review into the sale of Credit Suisse Additional Tier-1 (AT1) bonds to non-resident Indian clients. As per the report, the episode dates back to January 2025 and has drawn attention to the risks associated with complex fixed-income instruments, particularly after the collapse of Credit Suisse, where AT1 bonds were written off during the UBS-led rescue, causing heavy losses to investors.

Most of the AT1 bond buyers, many of whom were non-resident Indians (NRIs), alleged that bank executives misled them into moving their foreign currency non-resident (FCNR) deposits from India to Bahrain in order to invest in the bonds. 

Antique Stock Broking last week cut its target price on HDFC Bank as it believes Chakraborty's resignation casted shadow over the board despite improving earnings outlook. It suggested a revised target price of Rs 1,090 per share against Rs 1,200 earlier.