HDFC Bank Falls on Bribery Report: Illegal Payments for Deposits

HDFC Bank Shares Fall on Bribery Allegations

Shares of India's top private lender HDFC Bank fell as much as 2.5% on Wednesday after a local media report alleged the bank made illegal payments to a state government department to attract deposits.

Allegations and Bank Response

The Indian Express newspaper reported, citing sources and documents, that HDFC Bank paid 450 million rupees ($4.7 million) to the road development corporation of Maharashtra state to draw large deposits. Regulations prohibit lenders from paying varied interest rates to depositors. The report claimed the bank disguised the payments as marketing spends and that CEO Sashidhar Jagdishan was aware. An HDFC Bank spokesperson denied any wrongdoing, stating the bank has robust internal controls.

Market Reaction and Context

Shares have fallen 9.5% since March, when the bank's part-time chairman resigned, raising governance concerns. Legal firms appointed by HDFC Bank to review the claims have yet to find material lapses. The bank has not yet applied for central bank approval to reappoint CEO Jagdishan, whose term ends in October.