HDFC Bank imposes ₹1 lakh penalty on CEO and CFO: Here's why

HDFC Bank has imposed a ₹1 lakh monetary penalty on its Managing Director and CEO Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan, and Group Head, Retail Assets Arvind Vohra after an internal investigation into deposit mobilisation from the Maharashtra State Road Development Corporation (MSRDC).

The disciplinary action follows the findings of a Special Disciplinary Committee of Independent Directors, which reviewed the bank's arrangements with MSRDC in 2017 and 2021. According to a stock exchange filing by HDFC Bank, the board approved the penalties after identifying what it described as "business overreach" in the conduct of the employees involved.

Board acted on committee's recommendations

The bank said the board considered the committee's recommendations alongside the possibility of any divergence from applicable Reserve Bank of India (RBI) directions.

According to the filing, the board decided to:

• Impose a ₹1 lakh monetary penalty on three senior executives.
• Issue warning letters to the remaining employees involved.
• Inform the RBI of the disciplinary action and findings.

The decision was taken during the board meeting held on 23 July.

No evidence of mala fide intent

While the review resulted in disciplinary measures, the bank made it clear the findings did not point to misconduct involving personal benefit or dishonest motives.

In its filing, HDFC Bank said: "The conduct of the employees involved constituted business overreach rather than any mala fide action, personal enrichment, or improper motive."

The bank's assessment distinguishes the matter from cases involving fraud or intentional misconduct, describing it instead as a breach related to business practices.

What triggered the review

The internal review examined HDFC Bank's arrangements with MSRDC for securing deposits during 2017 and 2021.

The disciplinary action comes months after media reports published in May alleged the bank had paid approximately ₹45 crore, recorded as marketing expenditure, to attract deposits from the state road development agency. The reports also claimed CEO Sashidhar Jagdishan was aware of the payments.

At the time, HDFC Bank rejected suggestions of wrongdoing. The bank maintained its internal controls, audit processes and governance mechanisms had functioned as intended.

Compliance focus

The latest action indicates the bank chose to address the matter internally while also seeking alignment with regulatory expectations.

According to the filing, the disciplinary measures were taken partly to avoid any potential divergence from RBI directions. The bank confirmed the regulator has been informed of the outcome.

The action reflects the role of board-level oversight in reviewing governance matters involving senior leadership, particularly where regulatory compliance could be questioned.

Comes after another governance episode

The disciplinary decision follows another governance-related development at HDFC Bank earlier this year.

In March 2026, former Chairman Atanu Chakraborty stepped down, citing governance and ethical concerns.

HDFC Bank later said an independent legal review found no evidence supporting those concerns.

Although unrelated, both developments have placed the bank's governance framework under increased public scrutiny.