HDFC Bank Ltd., India's second-most valuable listed firm, experienced a significant drop in its share price on Wednesday, leading to a loss of over ₹24,000 crore in market capitalization. The decline followed a report by the Indian Express alleging that the private lender 'camouflaged' crores of rupees as marketing expenses to facilitate higher interest payments to a state-owned entity.
Internal Vigilance Investigation Launched
According to the report, the bank's Audit Committee of the Board (ACB), chaired by M D Ranganath, initiated a formal "Internal Vigilance Investigation" on March 12. This probe focuses on payments totaling ₹45 crore made to the Maharashtra State Road Development Corporation (MSRDC), a state government agency, during the financial years 2024 and 2025.
The investigation suggests that these payments, intended as "differential interest"—interest above the standard rate on MSRDC's deposits—were allegedly routed through the bank's marketing department. They were reportedly disguised as contributions to a road safety awareness campaign, facilitated by four local vendors.
Allegations and Leadership Context
The Indian Express investigation further claims that the payout was approved during senior-level discussions, where a higher interest rate for MSRDC was "verbally" agreed upon, reportedly in the presence of HDFC Bank MD & CEO Sashidhar Jagdishan.
This development comes after part-time Chairman and Independent Director Atanu Chakraborty resigned on March 18, citing a "lack of congruence with personal values and ethics." At the time, HDFC Bank had stated that no specific material matters, operational issues, or governance lapses were brought to its attention by Chakraborty.
Market Impact and Disclaimer
On Wednesday, HDFC Bank shares fell by approximately 2 per cent, hitting an intraday low of ₹761.25 apiece. The bank's market capitalization decreased from ₹11,99,374.28 crore on Tuesday to ₹11,75,125.05 crore, reflecting a loss of ₹24,249 crore.
Business Today, the original source of the report, stated it could not independently verify the allegations.