Shares of fell as much as 2 per cent on Wednesday after local media reported that the lender made illegal payments to a state government department to attract deposits.
The Indian Express newspaper reported, citing sources and documents, that HDFC Bank paid ₹45 crore ($4.7 million) to the road development corporation of of Maharashtra to draw large deposits. Regulations do not allow lenders to pay varied interest rates to depositors.
HDFC Bank disguised the additional payments as marketing spends to incentivise the department to make the deposits, the report said, adding that CEO Sashidhar Jagdishan was aware of these payments.
Reuters could not independently verify the report. An email sent to HDFC Bank did not receive an immediate response.
Shares of the lender were trading down 1.9% at ₹764.20 by 10:40 a.m. IST in Mumbai, while the benchmark BSE Sensex was marginally higher.
HDFC Bank’s shares have fallen 9.5% since March 19, when Atanu Chakraborty abruptly resigned as the lender’s part-time chairman, raising questions about governance practices.
While Chakraborty had not made specific allegations, he had said that practices at the bank were not in line with his “personal” values and ethics.
Legal firms appointed by HDFC Bank to review the claims have yet to find material lapses in processes followed by the bank, Reuters reported earlier this month.
The outcome of the legal review is awaited.
HDFC Bank has also yet to submit an application for the central bank to reappoint CEO Jagdishan, whose three-year term ends in October.
($1 = 95.7600 rupees)