HDFC Bank, India's largest private sector lender, is currently facing a class-action lawsuit in the United States District Court, Southern District of New York. The suit alleges violations of federal securities laws, stemming from claims that the bank camouflaged payments as marketing expenses to offer higher interest rates on deposits from a state-owned firm.
The legal action was initiated by plaintiff Jwalant Natvarlal Soneji against HDFC Bank, along with its MD and CEO Sashidhar Jagdishan, and CFO Srinivasan Vaidyanathan. The complaint details that the bank’s US-listed American Depository Shares (ADS) saw a significant decline of $1.02, or 4.1 percent, closing at $23.78 on May 27, 2026, following news reports about these alleged activities.
Allegations of Misleading Statements
According to the lawsuit, defendants "made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects" throughout the class period. Specifically, the complaint asserts that HDFC Bank concealed payments to the Maharashtra State Road Development Corporation (MSRDC) as marketing and sponsorship for a road safety drive. These actions were allegedly designed to induce deposits by offering higher interest, approved by senior management, and likely violated regulatory standards and the bank’s internal policies against improper inducements.
The plaintiff contends that as a direct consequence of these undisclosed activities, HDFC Bank's reported interest income and operating expenses were overstated. This, in turn, rendered the bank's public statements regarding its business and prospects materially misleading or lacking a reasonable basis. The lawsuit seeks compensation for significant losses and damages suffered by the plaintiff and other class members, demanding a jury trial and recovery of legal costs.
Bank's Internal Review and Findings
Prior to the US lawsuit, HDFC Bank had conducted its own internal review into the arrangements with MSRDC for deposit garnering between 2017 and 2021. On July 27, the bank announced disciplinary actions based on findings from a special disciplinary committee of independent directors. MD and CEO Sashidhar Jagdishan, CFO Srinivasan Vaidyanathan, and Group Head (Retail Assets) Arvind Vohra were each fined ₹1 lakh. Warning letters were also issued to other employees involved.
The bank's board, after reviewing the committee's recommendations on July 23, 2026, concluded that the employees' conduct constituted "business overreach" rather than any "mala fide action, personal enrichment, or improper motive." This internal assessment, however, has not prevented the filing of the class-action suit in the US, highlighting ongoing scrutiny into the bank's operational practices.