HDFC Bank has put out a statement in its defense after news emerged of the lender and its top executives facing a federal securities class action lawsuit in New York.
The lender says, "In the United States, these types of shareholder lawsuits are incredibly common after a company experiences a stock drop, and many companies listed in the U.S. routinely defend these lawsuits each year. The Bank believes the lawsuit is without merit and intends to vigorously defend itself."
The lawsuit follows allegations that the Indian banking giant orchestrated a covert scheme to illegally inflate interest payouts to a state government agency by disguising them as marketing expenses.
At the heart of the litigation is an alleged arrangement designed to woo lucrative deposits from the Maharashtra State Road Development Corporation (MSRDC). According to the filing, HDFC promised the state infrastructure firm a 6.01% interest rate on its deposits—a massive 2.51% markup over the standard 3.5% savings rate offered to regular customers.
Because banking regulations explicitly forbid offering negotiated returns to individual depositors, senior management allegedly devised a workaround. The lawsuit claims that between 2023 and 2025, HDFC routed approximately 45 crore rupees ($4.7 million USD) in differential interest to the state firm. Instead of being credited as interest, these funds were allegedly "camouflaged" as marketing spend to sponsor a road safety awareness campaign run by MSRDC, flowing through third-party vendors.
An internal vigilance probe reportedly concluded that this maneuver violated the Reserve Bank of India's (RBI) Master Directions, as well as HDFC's internal anti-bribery policies prohibiting "improper inducement".
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