HDFC Bank Finds No Mala Fide Intent in MSRDC Deposit Case; CEO, CFO Among Top Executives Fined

While the board ruled out any evidence of dishonest intent, it nevertheless acknowledged lapses in employee conduct and authorised disciplinary action against several officials, including some of the bank's most senior executives.

The internal review was carried out by a Special Disciplinary Committee comprising independent directors, adding an additional layer of governance oversight beyond the bank's executive management. After examining the committee's findings, the board concluded that although certain actions reflected excessive commercial zeal, they did not amount to misconduct driven by personal gain or deliberate wrongdoing.

The bank described the episode as a case of "business overreach", stressing that the investigation found no mala fide action, no personal enrichment and no improper motive on the part of employees involved.

However, the board also noted that aspects of the conduct could represent a potential divergence from applicable Reserve Bank of India (RBI) directions, making disciplinary action necessary despite the absence of malicious intent.

HDFC CEO, CFO and Retail Assets Head Penalised

As part of the disciplinary measures, Managing Director and Chief Executive Officer (CEO) Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan, and Group Head - Retail Assets Arvind Vohra have each been fined Rs 1 lakh.

Apart from the monetary penalties imposed on the three senior executives, the bank has also issued formal warning letters to other employees connected with the matter.

Notably, the board stopped short of announcing suspensions, management changes or any clawback of executive compensation, signalling that while accountability was necessary, the findings did not warrant harsher punitive measures.

The review was initiated after a report published by The Indian Express on May 27, 2026, alleged that HDFC Bank had paid nearly Rs 45 crore to the Maharashtra State Road Development Corporation as additional interest on institutional deposits.

According to the report, the payments were allegedly routed through marketing budgets and sponsorship expenses linked to a road safety campaign instead of being reflected as conventional interest payments.

The allegations immediately attracted attention because banking regulations prescribe strict norms governing deposit pricing, accounting practices and the use of marketing expenditures. Any perceived overlap between commercial incentives and regulated deposit transactions can invite heightened regulatory scrutiny.

Following publication of the report, HDFC Bank had categorically denied any wrongdoing, reiterating that it maintained robust governance standards, sound financial controls and comprehensive internal oversight mechanisms.

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