HDFC Bank’s US Legal Trouble Deepens With Investor Class Action
An investor has filed a securities fraud class action lawsuit against HDFC Bank in the US, alleging the bank disguised payments to MSRDC as marketing expenses.Summary
HDFC Bank, India's largest private-sector lender, is facing a securities fraud class-action lawsuit in the US District Court for the Southern District of New York. The complaint, filed by investor Jwalant Natvarlal Soneji on August 13, alleges that the bank made misleading statements and failed to disclose information about its business operations. The lawsuit specifically centers on payments allegedly made by HDFC Bank to the Maharashtra State Road Development Corporation (MSRDC). According to the complaint, the bank paid approximately ₹45 crore to the state agency while offering it an effective interest rate of 6.01%, which was 2.51 percentage points above the rate offered on other savings accounts. The complaint alleges that this differential interest was routed through the bank's marketing department and presented as sponsorship payments for an MSRDC road safety campaign, without proper disclosure to investors. The legal action follows investigations by three US law firms into the bank's disclosures and governance practices. The complaint relies on a May 27 report by The Indian Express, which alleged that an internal vigilance investigation found regulatory and governance breaches related to the payments. The lawsuit also cites the resignation of former HDFC Bank chairman Atanu Chakraborty in March. Following the allegations, the bank commissioned an independent legal review by US law firm Wilson Sonsini Goodrich & Rosati and Indian law firm Wadia Ghandy & Co., which concluded that there was no evidence to substantiate the allegations. The complaint represents allegations by the plaintiff and does not amount to a court finding that HDFC Bank or its executives violated US securities laws.
(Source：Outlook Business)