HDFC Bank came under scrutiny after former chairman Atanu Chakraborty resigned unexpectedly on March 18, saying some events and actions at the bank did not align with his personal values and ethics. He was replaced on an interim basis by Keki Mistry, who said the bank has strong ethics and that he would not remain on the board if there were governance concerns. The Reserve Bank of India later said it had no record of any matter that should raise concern about the bank’s operations or governance.
The controversy centers on an internal vigilance inquiry into payments linked to the Maharashtra State Road Development Corporation (MSRDC). According to internal records reviewed by The Indian Express, HDFC Bank approved a structure to compensate MSRDC for an agreed higher return on deposits, but instead of crediting the amount directly as interest, the bank routed the money through its marketing department and treated it as sponsorship for a road safety awareness campaign. The total amount involved is reported to be about ₹45 crore across 2023 to 2025.
The inquiry reportedly began after an audit committee of the board ordered a formal internal vigilance probe on March 12, following a 2024-25 internal audit of the marketing department. That audit had already flagged the MSRDC-related payments and described the marketing function’s performance as unsatisfactory. Investigators found that the arrangement was discussed in high-level meetings involving HDFC Bank MD and CEO Sashidhar Jagdishan. Several employees said Jagdishan was present when the bank discussed how it would compensate MSRDC. Chief Marketing Officer Ravi Santhanam reportedly admitted that marketing helped disguise the interest payout as a marketing expense.
The deal reportedly began in 2022, when MSRDC approached HDFC Bank to move deposits if it could receive a return of 6.01%, far above the standard savings rate. The bank’s normal savings rate at the time was 3.5%. The bank initially approved a special 4.5% rate for large deposits, but MSRDC’s expected inflows never materialized at the scale anticipated. When the gap between the promised 6.01% return and the bank’s normal offering could not be covered openly, the bank allegedly used vendor invoices and sponsorship bills to pass the difference through the marketing budget.
The vigilance report says the payments were not processed through the CSR team, even though road safety awareness programs would normally fall under CSR. It also says vendor invoices were poorly verified, with some documentation unsupported by proper event confirmation certificates. One set of invoices reportedly reused the same photograph as proof. The report found no clear evidence that a genuine road safety campaign for HDFC Bank had actually taken place.
The inquiry identified more than ten senior officials as having some responsibility, including Jagdishan, CFO Srinivasan Vaidyanathan, and Santhanam. The report describes possible violations of RBI instructions on interest rates, the bank’s anti-corruption policy, and broader banking governance norms. It also suggests that routing the payments through vendors may have created additional irregularities involving invoices and tax claims.
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