HDFC Bank Denies Lilavati Trust’s Allegation Against Its MD And CEO Sashidhar Jagdishan: Shares Trade Flat

HDFC Bank has strongly denied and condemned the criminal complaint filed against its Managing Director & CEO, Sashidhar Jagdishan and other senior officials, calling it a baseless and malicious attempt to derail an ongoing loan recovery dispute with the Mehta family over dues from Splendour Gems.

The ongoing conflict between Lilavati Kirtilal Mehta Medical Trust and HDFC Bank is impacting stock. HDFC Bank traded flat on the BSE at Rs 1,979.80 up by just 1.1 points at 11.45 am, after opening at Rs 1,987.05.

Shares of HDFC Bank Ltd rose by 2.33 per cent on June 6 and hit an all-time high of Rs 1,996.30. The rise had came after the Reserve Bank of India (RBI) cut the repo (lending) rate by 50 basis points to 5.5 per cent. In total, the RBI had reduced the repo rate by 100 basis points.

What are the allegations?

The Lilavati Kirtilal Mehta Medical Trust, which is run by the Mehta family and manages Lilavati Hospital in Mumbai, has accused HDFC Bank CEO Sashidhar Jagdishan of being involved in financial fraud. The Trust has asked the board of HDFC Bank, the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Finance Ministry to suspend him from all his roles.

The Trust has also accused eight other people, including some former HDFC Bank employees, of financial fraud and misuse of the Trust's funds.

An FIR was registered under orders of the Bombay Magistrate Court after a seized cash diary revealed Rs 14.42 crore misappropriated by trustees, of which Rs 2.05 crore was received by Jagdishan, establishing his direct involvement," the Trust had alleged.

The Trust also alleged that the offer of Rs 1.5 crore disguised as CSR funds to hospital staff shows the intent to destroy evidence and obstruct justice.

How has HDFC Bank responded?

Dismissing the allegation, HDFC Bank said that the complaint, filed by Lilavati Kirtilal Medical Trust, linked to the Mehta family had came in the wake of ongoing legal efforts by the Bank to recover Rs 65.22 crore from Splendour Gems Limited (formerly known as Beautiful Diamonds Limited), a company owned by the Mehta family.

Splendour Gems defaulted on loans provided by HDFC Bank and other consortium banks back in 1995. A recovery certificate was issued by the Debts Recovery Tribunal (DRT) in 2004, but the dues remain unpaid despite several enforcement actions.

According to HDFC Bank, this is not the first time members of the Mehta family have tried to block recovery efforts. The Bank says, the family has previously filed multiple legal actions, ranging from criminal complaints to regulatory petitions, most of which have either been dismissed or are being legally contested.

In a statement, HDFC Bank said, "These repeated legal actions, including the latest FIR, are retaliatory in nature and clearly intended to harass and intimidate the Bank and its officials. This is a gross misuse of the legal process aimed at evading repayment of long-standing dues."

The Bank added that such actions are "calculated distractions" from the Mehta family's financial obligations and an attempt to damage the reputation of HDFC Bank and its leadership.

HDFC Bank reconfirmed its commitment to ethical banking, transparency, and high standards of corporate governance. "We will continue to take all lawful steps to recover public money and defend the integrity of the Bank and its employees," the NSE statement highlighted.

In an official statement, the bank said it is committed to protecting its reputation and the integrity of its directors and employees while continuing the recovery process.