India’s largest private sector lender, HDFC Bank, has imposed penalties on its top officials, including Managing Director and CEO Sashidhar Jagdishan and Chief Financial Officer Srinivasan Vaidyanathan. The bank announced that these actions follow the conclusion of an internal review into its arrangements with the Maharashtra State Road Development Corporation (MSRDC) for garnering deposits between 2017 and 2021.
Internal Review Cites 'Business Overreach'
The bank's board, acting on recommendations from a special disciplinary committee of independent directors, determined that the conduct of the involved employees constituted “business overreach” rather than any “mala fide action, personal enrichment, or improper motive.” This decision was finalized at a board meeting held on July 23, 2026.
Despite finding no malicious intent, the bank proceeded with disciplinary action to address any potential divergence from the Reserve Bank of India’s applicable directives.
Penalties Issued to Top Executives
- Sashidhar Jagdishan, MD and CEO, received a fine of Rs 1 lakh.
- Srinivasan Vaidyanathan, CFO, received a fine of Rs 1 lakh.
- Arvind Vohra, Group Head (Retail Assets), received a fine of Rs 1 lakh.
Additionally, warning letters were issued to other employees implicated in the matter.
Background of the MSRDC Deposit Case
The internal investigation was initiated following a report published by the Indian Express on May 27, 2026. This report alleged that HDFC Bank had made payments totaling Rs 45 crore to MSRDC, purportedly as higher interest for their deposits, which were reportedly disguised under marketing budgets and sponsorships for a road safety campaign.
At the time of the report, HDFC Bank had publicly denied any wrongdoing, asserting its adherence to sound financial and risk management practices, alongside robust internal control systems. However, the allegations prompted scrutiny, including announcements by three US law firms that they would investigate on behalf of HDFC Bank Limited investors concerning potential violations of federal securities laws. The bank’s stock price reportedly declined by 4.1 percent following the initial news report.
The bank's recent internal review and subsequent penalties signal a definitive conclusion to this high-profile corporate governance matter.