Synopsis
Three US law firms are investigating HDFC Bank for alleged securities law violations. These companies are examining whether the bank disguised payments to MSRDC as marketing expenses. HDFC Bank shares fell significantly following these announcements and after the release of its first quarter results. The bank has strongly denied any allegations of wrongdoing or culpability. Investigations are underway as companies seek to expose shareholders who have suffered losses.
ETMarkets.com The probe dates back to a report that HDFC Bank allegedly made payments to the Maharashtra Road Development Corporation to attract large deposits from the state agency.
Actions of HDFC Bank slipped more than 1% on Friday after three American law firms announced investigations into whether the private Indian lender violated federal securities laws by allegedly disguising Rs 45 crore in payments to Maharashtra State Road Development Corporation (MSRDC) as marketing expenses.
Shares of HDFC Bank fell to Rs 737.25 apiece on NSE on Friday. Shares of India’s largest private lender have collapsed 10% in five sessions since the release of its report. First quarter result last weekend.
Why are 3 US law firms investigating HDFC Bank?Los Angeles-based Glancy Prongay Wolke & Rotter LLP, the Law Offices of Howard G. Smith in Pennsylvania, and the Law Offices of Frank R. Cruz in Century City each said they were investigating possible securities law violations by HDFC Bank and were calling on the lender’s loss-making shareholders to come forward, the Economic Times reported.
These three law firms have not yet revealed whether their investigations resulted in a formal class action filing. Such cases typically see U.S. securities firms use these preliminary investigative announcements to identify a lead plaintiff before going to federal court, a process that can take weeks or even months.
HDFC Bank did not respond to a query from Economic times.
Read also | Three US law firms investigate HDFC Bank over alleged deposit payments in Maharashtra
The investigation notably dates back to a report that HDFC Bank had made payments to the Maharashtra Road Development Corporation to attract large deposits from the state agency.
A report in The Indian Express said the payments were allegedly made to the Maharashtra State Road Development Corporation (MSRDC), a state government agency, just days before the former president Atanu Chakraborty resigned on March 18.
The Indian Express investigation, based on internal records, revealed that the payments were made to the Maharashtra State Road Development Corporation in the form of “differential interest”, or interest paid above the specified rate on its deposits. However, instead of being directly credited to MSRDC’s account as interest income, the funds were allegedly routed through the bank’s marketing department and presented as contributions to a road safety awareness campaign through four local vendors.
HDFC Bank had, however, strongly denied the allegations of wrongdoing. “The bank has robust monitoring, auditing and control processes and systems. All issues are handled in accordance with the standards set by the bank, and the complete process is always followed before the final decision after any internal review. We strongly reject any suggestion of wrongdoing or culpability based on selective evidence,” the bank said in a statement.HDFC Bank share priceHDFC Bank shares fell around 10% in a week and 7% in a month, a decline of over 25% in 2026 so far. Longer term, the Indian private lender’s shares generated negative returns of 26% in one year and 12% in three years, although they gained 3% in five years.
HDFC Bank last Saturday reported a 5% year-on-year (YoY) increase in net profit at Rs 19,060 crore for the first quarter of FY27, while NII grew 7% YoY to Rs 33,534 crore.
Read also | HDFC Bank and 3 other banking stocks wipe out Rs 1.5 lakh crore from investors’ wealth after Q1. Time to buy the dip?
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