Shares of top private lender HDFC Bank fell as much as 2.5% on Wednesday (May 27, 2026) after media reported that the lender made illegal payments to a State government department to attract deposits.
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The Indian Express newspaper reported, citing sources and documents, that HDFC Bank paid ₹450 million ($4.7 million) to the road development corporation of Maharashtra to draw large deposits. Regulations do not allow lenders to pay varied interest rates to depositors.
HDFC Bank disguised the additional payments as marketing spends to incentivise the department to make the deposits, the report said, adding that CEO Sashidhar Jagdishan was aware of these payments.
Reuters could not independently verify the report.
An HDFC Bank spokesperson told Reuters the lender has robust internal oversight, audit, and control processes and systems.
"All issues are dealt with in accordance with 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," the spokesperson said.
Shares of HDFC Bank were trading down 2.5% at ₹759.50 by 1:20 p.m. in Mumbai, while the benchmark BSE Sensex was marginally lower.
The shares have fallen 9.5% since March 19, when Atanu Chakraborty abruptly resigned as the lender's part-time Chairman, raising questions about governance practices.
While Mr. Chakraborty had not made specific allegations, he had said that practices at the bank were not in line with his "personal" values and ethics.
Legal firms appointed by HDFC Bank to review the claims have yet to find material lapses in processes followed by the bank, Reuters reported earlier this month.
The outcome of the legal review is awaited.
HDFC Bank has yet to submit an application for the central bank to reappoint Mr. Jagdishan, whose three-year term ends in October.