HDFC Bank denies offering differential interest rates on deposits
What's the story
HDFC Bank has refuted allegations of misconduct in its internal audit and governance processes. The bank's response comes after The Indian Express report claimed that it paid ₹45 crore to Maharashtra State Road Development Corporation (MSRDC) as differential interest rates on deposits. The bank said it has "robust internal oversight, audit & control processes" and all issues are handled according to established norms.
Controversy
Bank disguised additional payouts as marketing expenses
The Indian Express report, citing documents and sources, had claimed that HDFC Bank paid ₹45 crore to MSRDC to attract large deposits. It alleged that the bank disguised these additional payouts as marketing expenses through vendors. The report further claimed that CEO Sashidhar Jagdishan was aware of such an arrangement.
Market impact
HDFC Bank shares fall nearly 3%
Following these allegations, HDFC Bank's shares fell by 2.7% to ₹757.45 per share on the National Stock Exchange (NSE) at 3:00pm today. The stock has fallen some 9.5% since March 19 when part-time chairman Atanu Chakraborty unexpectedly resigned, raising concerns over governance practices at the lender. While Chakraborty did not make any direct allegations, he had said that certain practices within the bank were not aligned with his "personal" values and ethics.
Ongoing inquiries
Legal review of allegations underway
HDFC Bank had appointed legal firms to look into these allegations, but they didn't find any material lapses in the bank's processes so far. The final outcome of this legal review is still awaited. The bank has also not filed an application with the Reserve Bank of India for reappointing Jagdishan as CEO, whose current three-year term ends in October.