Stocks of India’s largest private lender HDFC Bank fell more than 2 percent in early trade on Wednesday. The drop in HDFC Bank shares came amidst a report in newspaper that alleged irregular payment practices. The report also raised concerns regarding HDFC bank’s internal governance processes. 

In the morning session, HDFC banks stock declined as much as 2.27 percent to Rs 761.25 apiece on the BSE. At the time of writing this piece HDFC banks stock at 1.47pm were trading lower by 2.48 percent to Rs 759.60 apiece on the BSE

Indian Express newspaper has claimed that HDFC Bank’s Audit Committee of the Board (ACB) on March 12 ordered a formal internal vigilance investigation into payments worth Rs 45 crore made to the Maharashtra State Road Development Corporation (MSRDC) during FY2024 and FY2025.

The report further stated that the payments were allegedly linked to differential interest offered on deposits maintained by MSRDC with the bank.

The IE report also claimed that HDF bank did not pay the state agency directly. Instead, they routed the money in their marketing budget, showing it as contributions they were paying four local businesses to run a road safety campaign.

The newspaper report also claimed that top managers, including HDFC Bank CEO Sashidhar Jagdishan, met and discussed this plan. The report highlighted that the sudden resignation of HDFC Bank’s then chairman, Atanu Chakraborty, on March 18 was due to this issue. 

Chakraborty reportedly quit over disagreements about ethics, although HDFC bank claims he never shared his specific concerns with them, even though they asked multiple times. Following his resignation, HDFC Group veteran Keki Mistry was appointed interim chairman and maintained that the bank’s governance and operations remained stable.

The report also stated that both the bank and the RBI did not respond to detailed queries sent by the newspaper before publication.