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HDFC Bank's board has imposed a monetary penalty of INR 1 lakh each on Managing Director and CEO Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan and Group Head (Retail Assets) Arvind Vohra over deviations from Reserve Bank of India (RBI) directions in the Maharashtra State Road Development Corporation (MSRDC) matter. The board said the actions stemmed from business overreach rather than any mala fide intent or personal gain. Warning letters were also issued to other employees involved, and the matter has been communicated to the RBI as part of the bank's regulatory compliance process.
HDFC Bank's board has imposed a monetary penalty of INR 1 lakh each on Managing Director and CEO Sashidhar Jagdishan, Chief Financial Officer (CFO) Srinivasan Vaidyanathan and Group Head (Retail Assets) Arvind Vohra for deviation from Reserve Bank of India (RBI) directions in connection with the Maharashtra State Road Development Corporation (MSRDC) case.
Apart from the financial penalty imposed on the three senior executives, the bank has issued warning letters to the other employees involved in the matter. The case relates to the mobilisation of large deposits from MSRDC between 2017 and 2021, during which around INR 45 crore was allegedly paid under the head of marketing expenditure.
The development comes shortly after the appointment of former Chief Election Commissioner and former Finance Secretary Rajiv Kumar as the part-time chairman of HDFC Bank. The RBI had approved his three-year appointment, which took effect earlier this month.
According to a regulatory filing, the bank's board reviewed the findings and recommendations of a Special Disciplinary Committee comprising independent directors. Based on the committee's assessment, the board concluded that the actions of the employees involved amounted to business overreach and did not indicate any mala fide conduct, personal enrichment or improper motive.
The filing stated that, considering the potential divergence from applicable RBI directions and based on the committee's recommendations, the board decided to impose a monetary penalty of INR 1 lakh each on the Managing Director and CEO, the CFO and the Group Head (Retail Assets). It also decided to issue warning letters to the remaining employees connected with the matter.
The board further directed that its decision and the disciplinary action taken be communicated to the Reserve Bank of India.
The matter first came into focus in recent months after reports claimed that HDFC Bank's audit committee had initiated an internal vigilance investigation into payments amounting to around INR 45 crore, which were allegedly classified as marketing expenditure while being linked to deposits received from MSRDC.
Responding to those reports at the time, HDFC Bank had denied any wrongdoing. The bank had stated that its internal oversight and audit systems were robust and that every matter was handled in accordance with established procedures and governance standards before any final conclusion was reached following an internal review.
The bank had also rejected allegations based on selective information, maintaining that no assumptions of wrongdoing or culpability should be drawn without completion of the prescribed review process. The latest board action indicates that while governance lapses warranted disciplinary measures, the independent committee did not find evidence of fraudulent intent or personal benefit in the conduct of the employees concerned.
Source PTI
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