The lawsuit alleges that HDFC Bank, under the direction of CEO Sashidhar Jagdishan and CFO Srinivasan Vaidyanathan, funneled approximately 45 crore rupees—roughly $4.7 million—to the Maharashtra State Road Development Corporation. Investigators claim this money was disguised as marketing expenses for a road safety campaign, but actually served as an illicit interest rate markup to circumvent Reserve Bank of India regulations. By routing these payments through the marketing department, the bank allegedly provided an above-market 6.01% interest rate to the state entity while obscuring the true nature of its operating expenses.

The scheme’s exposure triggered significant volatility in HDFC’s American Depositary Shares. Market confidence faltered on March 18, 2026, when part-time Chairman Atanu Chakraborty resigned, citing practices that clashed with his personal ethics, leading to a 7.28% drop in share price. Further damage occurred on May 27, 2026, after an investigation revealed an internal probe into the leadership’s conduct, causing shares to slide another 4.1%.

Reed Kathrein, the partner overseeing the investigation, stated the firm is scrutinizing how executives maintained a facade of strong governance while allegedly concealing these regulatory breaches. Investors who suffered losses between July 17, 2023, and May 26, 2026, have until October 13, 2026, to file for lead plaintiff status. The firm is also inviting whistleblowers with non-public information regarding the bank’s internal controls to come forward.