HDFC Bank Ltd. shares are trading under pressure on Thursday, August 27, after news of the lender and its top executives facing a federal securities class action lawsuit in New York. 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.
Shares of HDFC Bank fell as much as 1.18% to Rs 718.60 as of 9:20 am.
HDFC Bank, in a statement, has said, "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 complaint, filed in the U.S. District Court for the Southern District of New York by investor Jwalant Natvarlal Soneji, targets the Mumbai-headquartered bank along with Chief Executive Officer Sashidhar Jagdishan and Chief Financial Officer Srinivasan Vaidyanathan. The lawsuit is brought on behalf of all investors who purchased HDFC's American Depositary Shares (ADS) between July 17, 2023, and May 26, 2026.
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.
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