HDFC Bank Faces Vigilance Probe Over Alleged Rs 45 Crore MSRDC Payment Irregularities

HDFC Bank has come under scrutiny following allegations that payments amounting to nearly Rs 45 crore made to the Maharashtra State Road Development Corporation (MSRDC) were processed through the bank’s marketing expenditure instead of being recorded as direct interest payouts, according to a report by The Indian Express.

The matter reportedly came to light after an internal review of the bank’s marketing division for FY24 and FY25 flagged the transactions and marked the department’s performance as “unsatisfactory”. Based on the audit observations, the bank’s Audit Committee is said to have initiated a formal vigilance probe on March 12.

As per the report, the payments were allegedly intended to provide MSRDC with additional returns or “differential interest” on its deposits. However, investigators suspect the amount was routed via external vendors and shown as expenses linked to a road safety awareness initiative rather than being credited directly as interest income.

The report further alleged that senior executives, including HDFC Bank MD & CEO Sashidhar Jagdishan, were involved in discussions regarding the arrangement and had verbally approved a higher return structure for MSRDC deposits. Officials associated with the inquiry reportedly informed investigators that Jagdishan took part in meetings related to the matter.

Chief Marketing Officer Ravi Santhanam, whose testimony was cited in the report, allegedly stated that the marketing team acted as an intermediary to disguise the reimbursement of differential interest as marketing expenditure. He reportedly added that a portion of the spending was utilised for genuine promotional activities to lend legitimacy to the transactions, describing the case as an isolated instance.

The vigilance findings also reportedly mentioned CFO Srinivasan Vaidyanathan and several senior officials, pointing out that the arrangement lacked adequate documentation, internal approvals, and compliance oversight.

According to the report, the findings were later presented before the bank’s Audit Committee and Nomination and Remuneration Committee in April. The investigation reportedly concluded that the mechanism was outside approved governance norms and could expose the bank to operational, regulatory, and reputational risks.

The controversy has emerged shortly after former HDFC Bank chairman Atanu Chakraborty stepped down, reportedly citing concerns regarding certain practices within the bank that were inconsistent with expected governance standards.