India's largest private lender, HDFC Bank, is facing a serious governance crisis after an exclusive investigation by The Indian Express, based on internal records and testimonies, revealed that the bank allegedly paid ₹45 crore in disguised differential interest to the Maharashtra State Road Development Corporation (MSRDC), a state government agency, in violation of Reserve Bank of India norms.
HDFC Bank's shares fell more than 2 per cent on Wednesday following the report.
The payments, made during FY2024 and FY2025, were allegedly routed through the bank's marketing department and disguised as contributions to a road safety awareness campaign run by MSRDC, rather than being credited directly as interest.
The arrangement effectively gave MSRDC a return of 6.01 per cent on its savings deposits—far above the 3.5 per cent available to ordinary customers—in exchange for routing large deposits to the bank. RBI's Master Directions on deposit interest rates explicitly prohibit negotiated rates to individual depositors.
The Indian Express investigation reveals that the bank's own internal vigilance probe, ordered by the Audit Committee of the Board on March 12, 2026—just six days before outgoing chairman Atanu Chakraborty resigned, citing ethical concerns—concluded that over ten senior officials bore responsibility.
The bank's Chief Marketing Officer, Ravi Santhanam, testified in the probe that the marketing department acted as a "facilitator to camouflage differential interest reimbursement as marketing spend."
The probe also found that MD and CEO Sashidhar Jagdishan and CFO Srinivasan Vaidyanathan were present at the discussions where the arrangement was devised.
Legal firms appointed by HDFC Bank to review governance claims have yet to find material lapses. The RBI and HDFC Bank did not respond to detailed questionnaires from The Indian Express at the time of publication of the investigation.
