HDFC Bank slaps ₹1 lakh penalty each on CEO Jagdishan, CFO and others over 'business overreach'

In a rare and uncomfortable action of its kind in the banking industry, the board of India's largest private lender has penalised its own CEO, CFO and head of retail banking. HDFC Bank, on Monday, announced that it had issued warning letters and imposed a monetary penalty of ₹1 lakh each on three of its senior-most executives, including managing director and CEO Sashidhar Jagdishan.

The action was based on the findings and recommendations of the special disciplinary committee of independent directors, following the completion of an internal review into the arrangements with the Maharashtra state road development corporation (MSRDC) for garnering deposits in 2017 and 2021.

Besides Jagdishan, action was also taken against chief financial officer Srinivasan Vaidyanathan and group head (retail assets) Arvind Vohra. The matter will be communicated to the Reserve Bank of India (RBI).

This is one of the most direct actions initiated by HDFC Bank's board against Jagdishan and comes at a time when the lender is struggling to regain its governance premium, which it has steadily lost since its former part-time chairman Atanu Chakraborty stepped down on March 18, citing that "certain happenings and practices within the bank" were not in congruence with his personal values and ethics.

In June, an independent review conducted by two law firms found no evidence in board committee minutes or witness interviews that supported Chakraborty's concerns. However, the episode has brought Jagdishan into the spotlight for all the wrong reasons.

HDFC Bank's stock has fallen 12.2% since March 18 and is down more than 25% in 2026.

On July 27, HDFC Bank said: "Based on the findings and recommendation of the Special Disciplinary Committee of Independent Directors, the Board, at its meeting held on July 23, concluded that the conduct of the employees involved constituted business overreach rather than any mala fide action, personal enrichment, or improper motive," the bank said in its communication to the stock exchanges.

"However, keeping in view any potential divergence from the applicable RBI directions and based on the recommendations of the Special Disciplinary Committee of Independent Directors, the Board decided to issue warning letters and impose a monetary penalty." It also issued warning letters to other employees who were involved.

The issue first came to light on May 27, when it emerged that payments worth ₹45 crore had been routed through the bank's marketing department to MSRDC. At the time, HDFC Bank rejected allegations of wrongdoing, saying that "its internal oversight and audit mechanisms are robust and that all matters are handled as per established procedures."

"The bank has robust internal oversight, audit and control processes and systems. All issues are dealt with in accordance with the bank's established norms, and due process is always followed before any final determination after an internal review. We strongly reject any assumptions of wrongdoing or culpability based on selective material," the bank had said in its earlier statement.

According to media reports, an internal audit of the bank's marketing department for FY25 had flagged the transactions and rated the department's performance as "unsatisfactory."