The Board of HDFC Bank has decided to issue warning letters and impose a monetary penalty of Rs 1 lakh each on Managing Director & CEO Sashidhar Jagdishan, the Chief Financial Officer, and the Group Head of Retail Assets in connection with the mobilisation of deposits from the Maharashtra State Road Development Corporation (MSRDC) in 2017 and 2021.At its meeting on July 23, 2026, the Board also resolved to issue warning letters to other employees involved in the matter. The decision was based on the findings and recommendations of the Special Disciplinary Committee of Independent Directors.According to a regulatory filing by the bank on Monday, the Board concluded that the conduct of the employees involved amounted to “business overreach” rather than any mala fide action, personal enrichment, or improper motive.Independent analyst Arun Kejriwal, however, criticised the Board’s response. “This shows the Board has passed the buck without taking responsibility. If action has been taken against five senior officials, the most senior person should have been held accountable through stricter disciplinary action. The Board appears to have brushed aside the issue,” he said. Kejriwal argued that stronger punitive measures would have sent a clearer message about accountability and corporate governance standards within the organisation.Banking expert V. Viswanathan said the bank’s regulatory filing lacked sufficient detail, arguing that while there may have been no mala fide intent, the episode reflected a failure of corporate governance. He said routing interest payments through marketing expenses set a poor precedent for employees and stressed that the Board should have commented on the governance lapses of senior executives. Describing the matter merely as “business overreach” was inadequate, he added.Today’s board action comes amid the backdrop of former HDFC Bank Chairman Atanu Chakraborty’s resignation in March 2026 over concerns about certain practices within the bank. The matter gains added significance as MD & CEO Sashidhar Jagdishan’s second term ends in October 2026, with the Board, now led by Chairman Rajiv Kumar, set to recommend the bank’s leadership succession to the RBI.Background of the CaseThe Indian Express had reported that HDFC Bank’s Audit Committee, on March 12, 2026, ordered a vigilance probe into Rs 45 crore paid to MSRDC as “differential interest” on deposits during FY24 and FY25. The report alleged that the amount was routed through the bank’s marketing department and shown as contributions to a road-safety awareness campaign via four local vendors, instead of being credited directly as interest to MSRDC. The matter is expected to remain under scrutiny as the Board considers the bank’s future leadership.Published on July 27, 2026