HDFC Bank Slaps ₹1 Lakh Penalty on CEO, CFO Over ‘Business Overreach’ in MSRDC Deposit Case

Top Executives Face Disciplinary Action

HDFC Bank has imposed a penalty of ₹1 lakh each on its Managing Director and Chief Executive Officer Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan, and Group Head (Retail Assets) Arvind Vohra following an internal investigation into the bank's dealings with the Maharashtra State Road Development Corporation (MSRDC). Besides the financial penalty, all three executives have also received formal warning letters after the bank's board accepted the findings of a special disciplinary committee.

Internal Probe Into Deposit Transactions

The investigation examined deposit-related transactions between HDFC Bank and MSRDC carried out between 2017 and 2021. The committee looked into allegations that the bank had incurred around ₹45 crore in "marketing expenses" to secure large deposits from the state-owned infrastructure body. The review was initiated after concerns were raised over whether these practices complied with Reserve Bank of India (RBI) guidelines governing the mobilisation of institutional deposits and related business arrangements.

No Fraud or Personal Gain Found

After completing its inquiry, the Special Disciplinary Committee concluded that the actions of the executives amounted to "business overreach" rather than intentional wrongdoing. The committee found no evidence of fraud, corruption, personal financial gain or dishonest intent on the part of the officials. However, it observed that certain decisions reflected lapses in judgment and did not fully align with the bank's governance standards and compliance expectations. Based on these findings, the board decided that disciplinary action was necessary to reinforce accountability at the senior management level.

Governance Remains in Focus

The MSRDC matter has attracted significant attention from regulators and investors, particularly as HDFC Bank seeks regulatory approval for CEO Sashidhar Jagdishan's reappointment. While the bank has maintained that its internal controls remain strong and customer operations have not been affected, the latest action is seen as an effort to demonstrate transparency and uphold high corporate governance standards. Market analysts believe the penalties are largely symbolic but underscore the board's commitment to ensuring compliance with regulatory norms and maintaining investor confidence.

The bank reiterated that the disciplinary measures conclude its internal review process and reaffirmed its commitment to strengthening governance, risk management and ethical business practices across all levels of the organisation.