- HDFC Bank concluded its internal review on MSRDC deposit arrangements at board level
- Probe found employee actions were business overreach without mala fide intent or gain
- Board issued warning letters and imposed Rs 1 lakh penalty on involved top executives
HDFC Bank's board has officially concluded an internal review regarding past deposit arrangements with the Maharashtra State Road Development Corporation (MSRDC). With the MSRDC matter now formally closed at the board level, the bank is setting the stage for its next crucial leadership decision. Sources told NDTV Profit that HDFC Bank's Nomination and Remuneration Committee (NRC) is scheduled to meet soon to deliberate on the reappointment of its Chief Executive Officer (CEO).
The MSRDC case has delayed the RBI's decision on CEO reappointment and raised questions about how banks compete for large government deposits. Sources told NDTV Profit that the internal probe determined that the actions of the employees involved in the MSRDC deposit arrangements amounted to "business overreach," rather than any personal enrichment, or improper motives. The board issued warning letters and levied a monetary penalty of Rs 1 lakh on top executives, marking the culmination of the matter.
ALSO READ: HDFC Bank Fines CEO, CFO Rs 1 Lakh Each For 'Business Overreach' In MSRDC Probe
HDFC Bank's Trust Deficit
HDFC Bank's NRC To Weigh In On CEO Re-Appointment
Although the bank has never admitted to violating RBI regulations, the allegations prompted an internal disciplinary review and attracted the attention of investors, analysts and regulators. With the internal review now resolved, the bank's board's focus has now shifted to the impending reappointment of the bank's top executive. The CEO's current term ends in October, and the internal review's conclusion clears the path for the committee to formally evaluate his next term.
Once the NRC finalizes its review and the board makes a formal recommendation, the proposal will be sent to the banking regulator. The Reserve Bank of India (RBI) will evaluate the CEO's reappointment based on the board's final decision. The central bank mandates that a bank's board must submit names for the CEO position six months prior to the end of an incumbent's tenure, making the upcoming NRC meeting a critical milestone for India's largest private sector lender.
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