MUMBAI: India’s largest private sector lender HDFC Bank is facing serious questions over corporate governance after a media investigation alleged that the bank made Rs 45 crore in disguised payments to the Maharashtra State Road Development Corporation (MSRDC) to secure large deposits.

According to a report by The Indian Express, between FY24 and FY25, HDFC Bank routed approximately ₹45 crore to MSRDC, a Maharashtra government undertaking, by booking it as marketing expenses for a road safety awareness campaign. An internal vigilance investigation ordered by the bank’s Audit Committee in March 2026 reportedly found that these payments were actually “differential interest” — extra returns paid to MSRDC above the standard savings deposit rate.

The controversy dates back to 2021 when HDFC Bank aggressively pursued bulk deposits from MSRDC, which was expected to receive substantial funds from land acquisition projects. The bank allegedly offered an effective interest rate of 6.01% while the prevailing savings rate for others was around 3.5%. Instead of openly crediting the differential amount as interest, the payments were allegedly channelled through four local vendors under the marketing budget. 

The internal probe reportedly highlighted possible violations of RBI guidelines on fair interest rate practices, the bank’s own anti-bribery and anti-corruption policy, and raised concerns about lack of proper documentation and legal approvals. Senior executives, including MD & CEO Sashidhar Jagdishan, CFO Srinivasan Vaidyanathan, and CMO Ravi Santhanam, were mentioned in connection with the arrangement.

HDFC Bank has strongly denied any wrongdoing. In an official statement, the bank said it maintains “robust internal oversight, audit, and control systems” and rejected assumptions of misconduct based on “selective material.” The bank described such practices as common in the industry for institutional deposits.

The allegations triggered a sharp fall in HDFC Bank’s share price, which dropped over 2.5% on May 27, wiping off thousands of crores in market value. The development has sparked concerns among investors and analysts about governance standards at the country’s premier private bank, especially after its merger with HDFC Ltd.

The Reserve Bank of India is yet to comment officially, but market watchers believe the episode could invite closer regulatory scrutiny. The case highlights the intense competition among banks for low-cost institutional deposits and the grey areas in how such deals are structured.