HDFC Bank rejects 'assumptions of wrongdoing' after report flags ₹45 cr 'differential payment' to MSRDC

HDFC Bank on Wednesday strongly rejected “assumptions of wrongdoing or culpability” after a media report alleged that senior bank executives approved routing differential interest payments to a Maharashtra government agency through the bank’s marketing budget.

“The Bank has robust internal oversight, audit and control processes and systems. All issues are dealt with in accordance with the Bank’s established norms, and full process is always followed before final determination post any internal review,” CNBC-TV18 quoted the bank as saying.

“We strongly reject any assumptions of wrongdoing or culpability based on selective material,” it added.

The response came after The Indian Express reported that an internal vigilance investigation at HDFC Bank examined payments totalling about ₹45 crore made to the Maharashtra State Road Development Corporation (MSRDC) during fiscal years 2024 and 2025.

According to the report, the payments were allegedly routed through the bank’s marketing department as sponsorship expenses tied to road safety awareness campaigns, instead of being directly credited as interest on deposits.

The newspaper said the bank’s Audit Committee of the Board had ordered a formal internal vigilance investigation on March 12 after an audit flagged the payments and rated the marketing department’s performance as “unsatisfactory”.

The report alleged that the arrangement was linked to a commitment to provide MSRDC with a 6.01% return on deposits, higher than prevailing savings account rates.

Senior executives, including Managing Director and Chief Executive Officer Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan and Chief Marketing Officer Ravi Santhanam, were named in the report as having participated in discussions related to the arrangement, according to the newspaper.

CNBC-TV18, citing people familiar with the matter, reported that the practice of parking differential interest payments under marketing expenses was “industry-wide”.

“It is an industry-wide practice. When you pay a differential amount to one depositor, you don’t want to set it as a precedent. So, it is classified as a marketing expense,” one person told the channel.

Another source cited by CNBC-TV18 said the Reserve Bank of India had not found HDFC Bank in contravention of banking regulations in the matter. However, the issue could still invite regulatory censure because of the size of the differential involved.

The RBI had earlier said on March 19 that it had “no material concerns on record” regarding governance at HDFC Bank after former chairman Atanu Chakraborty resigned citing certain developments within the bank that were not in line with his personal values and ethics.