Shares of top private lender HDFC ​Bank fell as much as 2.5% on Wednesday (May 27, 2026) after media reported that the lender made illegal payments to ​a State government department to attract ⁠deposits.

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The Indian Express newspaper reported, citing sources and documents, that HDFC Bank paid ₹450 million ($4.7 million) to the road development ‌corporation of Maharashtra to draw large deposits. Regulations do not allow lenders ‌to pay varied interest rates to depositors.

HDFC Bank ‌disguised ⁠the additional payments as marketing spends to incentivise ⁠the department to make the deposits, the report said, adding that CEO Sashidhar Jagdishan was aware of these payments.

Reuters could not independently ​verify the report.

An HDFC ‌Bank spokesperson told Reuters the lender has robust internal oversight, audit, and control processes and systems.

“All issues are dealt with in accordance with established norms, and full ‌process is always followed before final determination post ​any internal review.”

“We strongly reject any assumptions of wrongdoing or culpability based on selective material,” ⁠the spokesperson said.

Shares of HDFC Bank were trading down 2.5% at ₹759.50 by 1:20 p.m. in ‌Mumbai, while the benchmark BSE Sensex was marginally lower.

The shares have fallen 9.5% since March 19, when Atanu Chakraborty abruptly resigned as the lender’s part-time Chairman, raising questions about governance practices.

While Mr. Chakraborty had not made specific allegations, he had said that practices at the bank ‌were not in line with his “personal” values and ethics.

Legal firms ​appointed by HDFC Bank to review the claims have yet to find material lapses in ⁠processes followed by the bank, Reuters reported earlier this month.

The outcome ⁠of the legal review is awaited.

HDFC Bank has yet to submit an application ‌for the central bank to reappoint Mr. Jagdishan, whose three-year term ends in October.

India’s markets regulator has begun a preliminary ‌review of the resignation letter of former HDFC Bank chairman ​Atanu Chakraborty for possible violations of rules governing directors of ⁠listed companies, two sources familiar with the matter said.

Mr. Chakraborty told Reuters he was not aware of any examination by the regulator.

In his resignation letter, Mr. Chakraborty cited “certain happenings ‌and practices within the bank” that he said were “not in congruence” with his personal values and ethics.

He did not ‌elaborate. The letter triggered an 8.7% slide in the stock the ‌following ⁠day and wiped $16.3 billion in market value over three sessions.

SEBI making checks

A department of the Securities and Exchange Board of India (SEBI) that oversees corporate disclosures and governance is examining the former chairman and other directors for alleged failures ​to do their fiduciary duties, ‌the sources said.

“[The] examination is to verify claims made in the resignation letter and whether other directors were aware of any material information and did not document them,” one said.

The Reserve Bank ‌of India, the primary regulator in the case, said last week ​it had found “no material concerns on record as regards its [bank’s] conduct or governance”.

“We are also checking if there ⁠was any misreporting of any events which could impact minority investors,” the first source said, adding that SEBI was reviewing the adequacy of disclosures by ‌both the bank and Mr. Chakraborty.

India’s rules for listed companies require independent directors to assess the quality and timeliness of information flow between management and the board.

Email queries sent to HDFC Bank and SEBI were not immediately answered.

Mr. Chakraborty told Reuters by text that he had not made any insinuations in his letter. He added that no one from ‌the regulator had contacted him and that he was unaware of any SEBI review.

Earlier this ​week, SEBI Chairman Tuhin Kanta Pandey, without commenting on individual cases, said independent directors must follow the code of conduct ⁠set out in regulations.

“No one can make insinuations without proper evidence ⁠being recorded,” Mr. Pandey said. “Any such comments do have an impact on minority shareholders…. Independent directors have to be responsible in terms of ‌what they say.”

HDFC Bank said on Tuesday (March 14, 2026) it had appointed external law firms to independently assess the concerns raised in the resignation ​letter. Mr. Chakraborty told Reuters the firms had not contacted him.