Shares of HDFC Bank declined in early trade on Tuesday after the private sector lender disclosed that its board had imposed monetary penalties on three of its senior executives following an internal review of its deposit arrangement with the Maharashtra State Road Development Corporation (MSRDC).

The bank's stock was trading lower during the morning session after the disclosure, reflecting investor reaction to the governance-related development.

In a stock exchange filing dated July 27, HDFC Bank stated that its board accepted the recommendations of a special disciplinary committee comprising independent directors and imposed a monetary penalty of ₹1 lakh each on Managing Director and Chief Executive Officer Sashidhar Jagdishan, Chief Financial Officer Srinivasan Vaidyanathan, and Group Head of Retail Assets Arvind Vohra. The review examined the bank's arrangements with MSRDC for mobilising deposits during 2017 and 2021.

The board noted that the internal investigation did not establish any conclusive evidence of mala fide conduct, personal enrichment, or improper motive on the part of the executives. However, it concluded that the conduct represented "business overreach" and could potentially diverge from applicable Reserve Bank of India directions.

Based on these findings, the board decided to issue warning letters along with the monetary penalties for the three senior executives, while warning letters were issued to other employees involved in the matter. The bank also informed that it would communicate the disciplinary action and findings to the Reserve Bank of India.

The review follows media reports published in May alleging that HDFC Bank had paid ₹45 crore to MSRDC as part of efforts to attract large deposits and that these payments were recorded as marketing expenditure. The reports had also alleged that the bank's CEO was aware of the transactions.

HDFC Bank had previously denied any wrongdoing, stating that it maintains robust internal governance, audit, and control mechanisms and that all matters are addressed in accordance with established internal policies and regulatory requirements.

Separately, the bank noted that an independent legal review had found no evidence supporting the ethical and governance concerns raised by former Chairman Atanu Chakraborty at the time of his resignation in March 2026.