HDFC Bank Faces US Lawsuit Over Alleged Interest Payout Scheme
HDFC Bank is defending a US class-action lawsuit alleging it disguised illegal interest payouts to a state agency as marketing expenses to inflate income.
Investor Jwalant Natvarlal Soneji filed a federal securities class-action lawsuit in the U.S. District Court for the Southern District of New York against HDFC Bank, CEO Sashidhar Jagdishan, and CFO Srinivasan Vaidyanathan. The suit alleges the bank orchestrated a scheme between 2023 and 2025 to illegally inflate interest payouts to the Maharashtra State Road Development Corporation by disguising approximately 45 crore rupees as marketing expenses for a road safety campaign.
According to the filing, this maneuver violated Reserve Bank of India norms and internal anti-bribery policies, resulting in overstated net interest income and operating expenses in SEC filings. The situation escalated following the March 18, 2026, resignation of Chairman Atanu Chakraborty, who cited ethical concerns, and a May 27, 2026, report by the Indian Express detailing an internal probe. These disclosures led to a significant drop in the bank's American Depository Shares.
HDFC Bank has denied the allegations, stating the lawsuit is "without merit" and that an internal review concluded the conduct was "business overreach" rather than mala fide action.
Keep reading in the app
The full story and every source, free in the app.
Coming soonGoogle Play