HDFC Bank shares plunge over 10% in four sessions, market cap drops by ₹1.34 lakh crore; here is why

Shares of HDFC Bank, the country's largest private sector lender, fell for a fourth straight session on Monday, March 23. In the last four trading sessions, HDFC Bank shares have collapsed as much as 10.53% to hit an intraday low of ₹756.30 on the National Stock Exchange (NSE). In the intraday deals the stock plunged as much as 3.09%.

Market capitalisation of HDFC Bank has been wiped out by ₹1.34 lakh crore to ₹11.63 lakh crore in last four session, data from NSE showed.

HDFC Bank shares came under renewed selling pressure on Monday after reports suggested that it asked three senior executives to leave the bank for their alleged involvement in the mis-selling of Credit Suisse’s Additional Tier 1 Bonds.

As per reports, HDFC Bank is investigating allegations that its employees mis-sold high risk AT1 bonds from its Dubai branch.

The development comes days after its non-executive chairman Atanu Chakraborty abruptly resigned from his position on March 18 citing differences over “values and ethics”.

Keki Mistry, a veteran of the HDFC Bank Group, was appointed as the interim chairman following the resignation and said there may have been “relationship issues” between Chakraborty and the executive leadership but found no “substantive” concerns behind the departure.

Mistry emphasised that the bank’s operations and governance remain stable.

This is the first time that the part-time chairman of HDFC Bank left midway, raising concerns over its functioning.

What are AT1 Bonds?

Additional Tier 1 (AT1) bonds are perpetual, high-yield debt instruments issued by banks to boost their core (Tier 1) capital in line with Basel III norms. Since they have no fixed maturity date, investors may not get their principal back on a set timeline, although banks typically include call options that allow them to redeem the bonds after a specified period.

These instruments carry elevated risk, as they can be written down or converted into equity if the issuing bank’s capital falls below required regulatory thresholds.

As of 9:36 am, HDFC Bank shares traded 2.11% lower at ₹764, underperforming the NIFTY50 index which was down 1.66%.