India’s largest private sector bank – HDFC Bank is facing a lawsuit in the United States.
The lawsuit is related to the fall in HDFC Bank shares following a news report that had appeared on May 27, 2026 alleging the bank had made payments worth ₹45 crore to Maharashtra State Road Development Corporation (MSRDC) as higher interest for their deposits and that this was disguised under marketing budgets and sponsorships for a road safety drive.
Business Today had reported on July 23 that three law firms had said they would probe whether there had been any possible violation of federal securities laws. Subsequently, a class action suit has now been filed in the US District Court, Southern District of New York by one Jwalant Natvarlal Soneji against HDFC Bank, MD and CEO Sashidhar Jagdishan and Srinivasan Vaidyanathan the bank’s CFO.
As per the Indian Express report, HDFC Bank camouflaged crores as marketing spend to pay higher interest to state firm. Due to this, the price of the bank’s US-listed American Depository shares (ADS) fell $1.02 or 4.1 per cent to close at $23.78 on May 27, 2026, on unusually heavy trading volumes.
The complaint states – “Throughout the class period, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects,”.
The complaint alleged that the defendants failed to disclose to investors that HDFC Bank camouflaged payments as marketing spend to pay higher interest to a state firm in order to induce deposits, these activities were approved by senior management, these activities likely violated regulations and the company’s own policies, including those that prohibit payments that could constitute improper inducement, as a result of the foregoing, the company’s interest income and operating expenses were overstated, and as a result, defendants’ positive statements about the company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages,” the complaint stated.
The plaintiff has demanded a jury trial, award of compensation for the damages sustained as a result of defendants’ “wrongdoing” in an amount to be proven at trial, including interest. The plaintiff is also seeking costs and expenses incurred in filing this lawsuit.
On July 27, HDFC Bank imposed minor penalty on Jagdishan, Vaidyanathan, and Arvind Vohra, group head (retail assets). Penalty of ₹1 lakh was imposed on both, while warning letters were also issued to other employees.
HDFC Bank had conducted an internal inquiry. The board at its meeting held on July 23, 2026, concluded that the conduct of the employees involved constituted business overreach rather than any mala fide action, personal enrichment, or improper motive.
After the issue was highlighted in social media, RBI asked HDFC Bank to explain how Bank decided to impose penalty of Rs.1 lakh. RBI asked how Bank decided how much penalty should be imposed on the accused.
