HDFC Bank Faces Securities Fraud Lawsuit Over Hidden Payments

The lawsuit claims that HDFC Bank, led by CEO Sashidhar Jagdishan and CFO Srinivasan Vaidyanathan, funneled approximately 45 crore rupees—roughly $4.7 million—to the Maharashtra State Road Development Corporation. According to the complaint, these payments were disguised as sponsorship contributions for road safety campaigns to bypass Reserve Bank of India regulations on interest rates. By routing the funds through the bank's marketing department, management allegedly provided the state firm with a 6.01% interest rate, significantly higher than standard retail offerings.

These practices surfaced throughout 2026, triggering significant volatility in HDFC American Depositary Shares. The turmoil began on March 18, 2026, when Chairman Atanu Chakraborty resigned, citing practices that were not in congruence with his personal values. The stock subsequently dropped 7.28%. Further scrutiny intensified on May 27, 2026, following an investigative report by The Indian Express, which linked the bank's leadership to an internal probe regarding the hidden payments. HDFC shares fell another 4.1% following that disclosure. Hagens Berman, the firm leading the class action, is now investigating the extent to which these internal controls were undermined to misrepresent the bank's financial health to shareholders.