HDFC Bank Finds 'Business Overreach' in MSRDC Deposit Case; Three Top Executives Fined ₹1 Lakh Each

HDFC Bank has concluded its internal review into its deposit arrangements with the Maharashtra State Road Development Corporation (MSRDC), finding that the employees involved were guilty of "business overreach" rather than any mala fide conduct, according to a public statement issued by the bank.

The Board accepted the recommendations of a Special Disciplinary Committee of Independent Directors and decided to issue warning letters along with a monetary penalty of ₹1 lakh each to the bank's Managing Director & CEO, Chief Financial Officer (CFO) and Group Head – Retail Assets. Other employees involved in the matter have received warning letters.

Board Finds 'Business Overreach'

The review examined the bank's arrangements with the state-owned infrastructure agency for mobilising deposits in 2017 and 2021. The Special Disciplinary Committee of Independent Directors was tasked with examining the matter and submitting its findings to the Board.

In its statement, HDFC Bank said the Board concluded that "the conduct of the employees involved constituted business overreach rather than any mala fide action, personal enrichment, or improper motive."

However, the bank added that "keeping in view any potential divergence with the applicable RBI Directions," the Board decided disciplinary action was warranted.

Warning Letters, Penalty for Executives

Based on the committee's recommendations, the Board decided to issue warning letters and impose a monetary penalty of ₹1 lakh each on the bank's Managing Director & CEO, Chief Financial Officer and Group Head – Retail Assets.

The remaining employees associated with the matter have been issued warning letters. The bank did not disclose the names of the officials in its public statement.

The Board also directed that "the matter be communicated to the Reserve Bank of India," formally closing the bank's internal disciplinary process related to the MSRDC deposit arrangements.