HDFC Bank shares declined 2.63 per cent on the BSE on Wednesday on fears the bank may face regulatory scrutiny and possible enforcement action due to alleged disguising of extra interest payments as marketing expenditure on deposits placed by a Maharashtra government-owned entity.

Among the 12 constituents of the BSE Private Bank Index, which declined only 0.38 per cent, the shares of India’s largest private sector bank fell the most.

The Indian Express reported that on March 12, 2026, the Audit Committee of HDFC Bank’s Board (ACB) had ordered a formal internal vigilance investigation into payments totalling ₹45 crore as “differential interest” (interest over and above the specified rate) made to the Maharashtra State Road Development Corporation (MSRDC) on its deposits during FY24 and FY25.

The report alleged that instead of being credited directly to MSRDC’S account as interest earned, the aforementioned amount was routed through the bank’s marketing department, disguised as contributions to a road safety awareness campaign through four local vendors.

This report comes in the backdrop of Atanu Chakraborty stirring a hornet’s nest by abruptly resigning from his position as Part-time Chairman and Independent Director of the bank on March 17, 2026.

In his resignation letter, he cited “certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal values and ethics.”

Keki Mistry, who was appointed as Interim Part-Time Chairman of HDFC Bank, told analysts and media that at the age of 71, he would not take on the responsibility as Chairman for three months if the systems, processes and governance practices in the bank did not align with his principles and his level of integrity.

Refutes charges

Reacting to the news report, the bank, in a statement, emphasised that it has robust internal oversight, audit and control processes and systems.

“All issues are dealt with in accordance with bank’s established norms, and full process is always followed before final determination post any internal review. We strongly reject any assumptions of wrongdoing or culpability based on selective material,” per the statement.

Juxtaposing the RBI’s March 19 statement on HDFC Bank that it is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally-run board and competent management team and the latest development, banking analysts say the regulator may now move against the bank, including pulling up the management.

In September 2024, the RBI imposed a ₹1-crore monetary penalty on the bank for giving gifts (in the form of paying first-year premium for the complimentary life insurance cover) costing more than ₹250 to the depositors at the time of accepting certain deposits; opening certain savings deposit accounts in the name of ineligible entities; and failing to ensure that customers are not contacted after 7 pm and before 7 am.

Published on May 27, 2026