HDFC Bank shares fall on report that deepens CEO woes

HDFC Bank shares fell on Wednesday after an Indian Express report alleged the lender used marketing expenses to route Rs 45 crore ($4.7 million) to Maharashtra State Road Development Corp., a structure the newspaper said lifted the agency’s deposit return to 6.01 per cent and added to pressure on chief executive Sashidhar Jagdishan.

The stock fell as much as 2.5 per cent in Mumbai trading and changed hands at 759.50 rupees at 1:20 p.m. IST, Reuters reported. The decline left HDFC Bank down 23 per cent for 2026, Bloomberg reported.

Markets were reacting to more than a disputed transaction. The report raised a question about how HDFC Bank priced a large deposit relationship and how investors should judge management oversight at India’s biggest private-sector lender.

According to the Indian Express report, the payments were made between 2022 and 2024 and recorded as marketing spending even though they increased the agency’s return above the contracted deposit rate. In effect, the allegation was that part of the funding cost sat outside ordinary interest expense.

That helps explain why the selling went beyond a routine single-session drop. Investors can look through one soft quarter. Questions about funding practices or internal controls are different because they speak to how a bank is run.

HDFC Bank pushed back in comments carried by Reuters and said the article relied on selective material.

“We strongly reject any assumptions of wrongdoing or culpability based on selective material”
HDFC Bank spokesperson, Reuters

The response put the bank’s position into the market, but the shares stayed under pressure. By midday, traders still appeared to be weighing whether the issue would end with a clarification or develop into a broader governance test for Jagdishan.

What investors are watching

The Indian Express, citing the central bank, said the Reserve Bank of India’s periodic assessment had found no material concerns on record about HDFC Bank’s conduct or governance.

“Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance”
RBI statement, The Indian Express

That offered some reassurance without settling the matter. As reported, the RBI’s comment described what appeared in a periodic review; it did not address the allegation that moved the stock on Wednesday.

HDFC Bank’s scale is part of why the reaction matters. When a lender of that size drops on a report about deposit practices, investors tend to read the move as a test of management credibility as well as of near-term earnings power. With the shares already down 23 per cent this year, Wednesday’s decline reinforced the sense that governance risk was weighing on sentiment.

Unless the bank provides a fuller account, or regulators say more, the shares may remain the clearest gauge of how seriously investors take the overhang around Jagdishan and the bank’s deposit practices.