MUMBAI: Following media reports earlier in the day accusing HDFC Bank of flouting its own norms as well that of the regulator in offering a special rate of interest for a large deposit from the Maharashtra Road Development Corporation in 2021 and camouflaging the interest payout as marketing expenses paid through its vendors, HDFC Bank Wednesday denied any wrongdoing and dismissed the charges as mere “assumptions.”
“We strongly reject any assumptions of wrongdoing or culpability based on selective material,” the second largest lender, which in mid-March was hit a surprise resignation of its part-time chairman Atanu Chakraborty who accused it of doing certain unspecified things which “are not in congruence with his moral and ethical values.”
But the regulator, RBI and a legal whetting gave it a clean chit to the bank management.
“We’ve robust internal oversight, audit and control processes and systems. All issues are dealt with in accordance with our established norms, and full process is always followed before final determination post any internal review,” the largest private sector lender said in a statement.
The media report pegged the camouflaged interest payment at Rs 45 crore which was accounted as marketing spends towards sponsorship for the road safety drive of MSRDC, and not as interest on the large savings deposit, which was promised to be in excess of Rs 25,000 crore over a period of time, but which never got totaled up even a tenth of that.
The report also said chief executive Sashidhar Jagdishan gave the go ahead for a 6.01% interest to MSRDC “verbally” against the bank’s then prevailing SB interest rate of 3.5% in 2021, while chief financial officer Srinivasan Vaidyanathan and chief marketing officer Ravi Santhanam were personally involved in clearing the same and later admitted to the internal audit panel of their involvement.
The report claimed that the bank’s probe found that the scheme violated RBI norms on deposit pricing which bans a lender from offering different rates to different people on their savings deposits, and also the bank’s own internal norms.
And the audit committee disclosure came just six days before (March 12) Chakraborty resigned and ordered a formal “internal vigilance investigation” into payments totalling Rs 45 crore made to MSRDC during FY24 and FY25.
This order came after an internal audit of the bank’s marketing department, covering the period 2024-25, flagged these payments and rated the department’s performance as “unsatisfactory.”
These payments were meant for MSRDC as differential interest—the interest over and above the specified rate, on its deposits. But instead of being credited directly to MSRDC’s account as interest earned, they’re routed through the bank’s marketing department, disguised as contributions to a road safety awareness campaign through four local vendors.
The issue began in 2021 when the bank approached MSRDC seeking its savings deposits and was offered deposits worth Rs 25,000 crore from a major land acquisition project if offered at least 6.01% interest.
