HDFC Bank’s US Legal Trouble Deepens With Investor Class Action

HDFC Bank, India’s largest private-sector lender, is facing a securities fraud class-action lawsuit in the US, with an investor alleging that the bank violated American securities laws and caused losses to shareholders, according to a Mint report.

Jwalant Natvarlal Soneji, an HDFC Bank investor, filed the complaint on August 13 in the US District Court for the Southern District of New York. The proposed class covers investors who purchased or acquired HDFC securities between July 17, 2023 and May 26, 2026.

The complaint alleges that HDFC Bank made misleading statements and failed to disclose information about its business, operations and prospects that could have affected investors. A court summons issued on August 14 requires the bank to respond within 21 days after being served, the news publication reported.

What The Lawsuit Alleges

The lawsuit centres on payments allegedly made by HDFC Bank to the Maharashtra State Road Development Corporation (MSRDC). According to the complaint, the bank allegedly paid about ₹45 crore to the state agency while offering it an effective interest rate of 6.01%, or 2.51 percentage points above the rate offered on other savings accounts.

The complaint alleges that the differential interest was routed through the bank’s marketing department and presented as sponsorship payments for an MSRDC road safety campaign. It further claims that the arrangement was not properly disclosed to investors and may have breached regulations and the bank’s internal policies.

The complaint relies heavily on a May 27 report by The Indian Express, which alleged that an internal vigilance investigation had found regulatory and governance breaches related to the payments. It also alleged that more than 10 senior officials were found responsible by the internal probe, including Jagdishan.

Lawsuit Follows US Law Firm Probes

The lawsuit comes after three US law firms separately announced investigations into whether HDFC Bank violated US securities laws through potentially misleading disclosures. The firms included Glancy Prongay & Rotter LLP, the Law Offices of Frank R Cruz and the Law Offices of Howard G Smith.

The latest lawsuit marks an escalation from those investigations, taking the allegations into formal court proceedings. Mint reported that the complaint represents allegations by the plaintiff and does not amount to a court finding that HDFC Bank or its executives violated US securities laws.

Investors covered by the proposed class have 60 days from the date of the notice to seek appointment as lead plaintiff, according to Business Wire.

The complaint also cites former HDFC Bank chairman Atanu Chakraborty’s resignation in March. Following the allegations, the bank commissioned an independent legal review by US law firm Wilson Sonsini Goodrich & Rosati and Indian law firm Wadia Ghandy & Co. The review concluded that there was no evidence to substantiate Chakraborty’s allegations.

HDFC Bank had previously rejected suggestions of wrongdoing after the allegations emerged.