HDFC Bank shares have fallen nearly 8% following reports of a Rs 45 crore payment controversy involving the Maharashtra State Road Development Corporation (MSRDC). The payments, flagged by an internal audit, were allegedly routed through the bank's marketing department as contributions to a road safety campaign, raising concerns over corporate governance.
The Indian Express reported that the payments were made just days before former chairman Atanu Chakraborty resigned on March 18, citing ethical concerns. The internal audit covering FY25 rated the marketing department's performance as "unsatisfactory" due to these payments. Records indicate that senior-level discussions, including those attended by CEO Sashidhar Jagdishan, approved the routing of differential interest through the marketing budget.
HDFC Bank's Chief Marketing Officer Ravi Santhanam admitted during a Vigilance probe that the department acted as a "facilitator" to disguise the differential interest reimbursement as marketing spend. The probe report was sent to the Audit Committee of the Board and the Nomination and Remuneration Committee in April.
“We wish to state that in line with the highest corporate governance standards of the Bank, the Internal Audit function conducts reviews, identifies and presents its observations from time to time.”
HDFC Bank Statement
In response, HDFC Bank issued a clarification emphasizing its commitment to high corporate governance standards and robust financial practices. The bank stated that its internal audit function regularly reviews and addresses such observations comprehensively.
Since the news broke, HDFC Bank shares have declined nearly 8%, with a 23% drop recorded in 2026. The situation underscores the importance of transparency and adherence to corporate governance in maintaining investor confidence.
“HDFC Bank continues to maintain sound financial and risk management practices, with robust systems of internal control and oversight.”
HDFC Bank Regulatory Filing
Background
HDFC Bank has been under scrutiny following the resignation of its former chairman Atanu Chakraborty, who cited ethical concerns. The bank's handling of the Rs 45 crore payment to MSRDC has raised questions about its corporate governance practices, which are crucial for maintaining investor trust.
Investors will be closely monitoring HDFC Bank's next steps in addressing these governance issues and restoring market confidence. The bank's handling of the situation could have significant implications for its future performance and reputation.
