HDFC Bank penalizes 12 executives in Credit Suisse bond controversy
What's the story
HDFC Bank has taken disciplinary action against at least 12 senior and mid-level executives, including Ashish Parthasarthy, over their alleged involvement in the mis-selling of Credit Suisse AT1 bonds. The bank has revoked increments and employee stock options (ESOPs) for those involved. The move comes after a series of accountability measures related to the AT1 bond controversy.
Past measures
Three senior executives sacked last year
Before this, HDFC Bank had sacked three senior executives, including group head of branch banking Sampath Kumar. Two others, Harsh Gupta and Payal Mandhyan, were also dismissed after internal findings. The bank had suspended Gupta and Mandhyan in January 2025 after launching an internal probe into the alleged mis-selling of debt products at its Dubai branch.
Investor claims
Controversy dates back to March 2023
Several AT1 bond investors have claimed they were encouraged to transfer their foreign currency non-resident (FCNR) deposits from India to Bahrain. The controversy dates back to March 2023 when Swiss regulators wrote down Credit Suisse's AT1 bonds to zero during UBS's emergency takeover, wiping out investors holding these quasi-equity instruments. Notably, AT1 bonds have been written off during bank bailouts in several countries, including India.
CEO's statement
HDFC Bank MD-Jagdishan insists no fraud committed
Despite the personnel actions, HDFC Bank MD and CEO Sashidhar Jagdishan has insisted that no fraud was committed. He said in June 2023, the Dubai Financial Services Authority clarified that clients who are continuously engaged in Dubai must also be onboarded there, even if accounts are booked in Bahrain. "Our assessment is that this was a technical lapse in documentation and regulatory interpretation, not fraud or mis-selling," he told The Economic Times on March 23.
Compliance issues
Regulatory fallout became public in September 2025
The regulatory fallout became public in September 2025 when HDFC Bank revealed that the Dubai Financial Services Authority had barred its DIFC branch from onboarding new clients or undertaking fresh business. The prohibition was imposed for non-compliance with regulatory requirements related to servicing clients not onboarded through the DIFC entity and lapses in advisory and credit arrangement practices.