HDFC Bank Shares Drop Over 2% Amid Governance Probe Report (Img: Internet)
New Delhi: Shares of HDFC Bank went down sharply on Wednesday. This happened after a media report said the bank had an investigation. The investigation was into payments nearly Rs 45 crore. These payments were linked to the Maharashtra State Road Development Corporation or MSRDC.
The stock fell much as 2.26 percent. This happened during trade on the National Stock Exchange or NSE. At 10 am HDFC Bank shares touched the day’s low of Rs 761.25. This was compared to the close of Rs 778.90.
The decline came after a reports the report detailed an alleged inquiry. The inquiry was into " interest" payments made during FY24 and FY25. HDFC Bank made these payments.
Payments were allegedly routed through the marketing department. According to the report the disputed payments were connected to deposits. MSRDC maintained these deposits with HDFC Bank. Of directly transferring the extra interest amount to MSRDC the money was allegedly routed through HDFC Bank’s marketing division.
The report claimed the expenditure was shown as costs. These costs were linked to a road safety awareness campaign. The campaign was carried out through vendors. Investigators reportedly examined whether the routing of funds violated banking norms and internal governance standards of HDFC Bank.
The internal vigilance inquiry was reportedly initiated by HDFC Bank’s Audit Committee on March 12. The development came days before former chairman Atanu Chakraborty stepped down from his role on March 18.
Atanu Chakraborty had cited concerns regarding developments within HDFC Bank. He announced his resignation although no further details were officially disclosed at the time.
The inquiry examined the role of senior executives. These executives included Managing Director and CEO Sashidhar Jagdishan. Others included Chief Financial Officer Srinivasan Vaidyanathan and Chief Marketing Officer Ravi Santhanam. The investigation allegedly found that top officials were aware of discussions. These discussions were regarding compensation to MSRDC over an interest gap.
The report further stated that the inquiry flagged breaches of Reserve Bank of India regulations. These regulations were related to deposit interest payments. Questions were also reportedly raised over compliance with HDFC Bank’s -bribery and governance policies. Additionally some invoices linked to the awareness campaign lacked adequate supporting documents and verification.
At the time of publication, HDFC Bank, the RBI and MSRDC had not issued responses, to the claims mentioned in the report.
