HDFC Bank Shares Fall Over Deposit Payment Claims
Shares of India's HDFC Bank fell 2.5% on Wednesday following reports that the lender made undisclosed payments to a Maharashtra state department to attract large deposits. The bank has rejected any wrongdoing while awaiting the results of a legal review into its internal governance practices.
HDFC BANK LTD-ADR shares fell 2.5% on May 27 following reports of illegal payments to a state department to secure large deposits. The drop in India's largest private lender follows allegations of 450 million rupees rose by 4.7 million dollars in disguised marketing spends. For investors, the news intensifies governance concerns that have erased 9.5% of the bank's market value since March 19.
### Allegations of Disguised Interest Payments The Indian Express reported that HDFC Bank paid the Maharashtra road development corporation to attract deposits, citing internal documents. Indian regulations prohibit lenders from offering varied interest rates to different depositors. The report alleges the bank categorized these payments as marketing incentives and claims CEO Sashidhar Jagdishan was aware of the arrangement.
