Sunita Somvanshi
A federal securities class-action lawsuit has been filed against HDFC Bank in the Southern District of New York. The case was brought by investor Jwalant Natvarlal Soneji and names chief executive Shashidhar Jagdishan and chief financial officer Srinivasan Vaidyanathan as defendants. The class period covers American Depositary Shares bought between July 17, 2023, and May 26, 2026.
The plaintiffs allege that HDFC Bank ran a covert scheme that gave the Maharashtra State Road Development Corporation a 6.01 percent interest rate, against the standard 3.5 percent savings rate, a difference of 2.51 percentage points. They say this breached Reserve Bank of India rules that bar negotiated returns for individual depositors. According to the complaint, about Rs 45 crore in extra interest paid from 2023 to 2025 was recorded as marketing expense for sponsoring an MSRDC road-safety campaign through third parties. An internal vigilance review reportedly found breaches of RBI master directions and the bank’s own anti-bribery policy. The RBI central board oversees such regulatory compliance.
The lawsuit also alleges that HDFC Bank’s FY24 and FY25 Form 20-F filings falsely stated that internal controls over financial reporting were “effective.” The hidden interest payments, the plaintiffs say, inflated operating costs and overstated net interest income.
On March 18, 2026, chairman Atanu Chakraborty resigned, citing “certain events and practices” that did not align with his values. The bank’s American Depositary Shares fell 7.28 percent to $26.62. On May 27, 2026, The Indian Express reported an internal probe involving more than 10 senior officers, including the chief executive, who the report said gave oral approval. Shares fell a further 4.1 percent to $23.78. The plaintiffs cite sections 10(b) and 20(b) of the Securities Exchange Act of 1934 and seek class certification, damages, and a jury trial. HDFC Bank has said such lawsuits are common after share-price declines and that it believes the case lacks merit and will defend it vigorously.
In a separate matter, more than 75 investors, including former banker Hitesh Bhatia, allege mis-selling of a Carlisle Luxembourg life settlement fund sold through HDFC Bank’s Dubai branch. They say they invested over $13.5 million and were told it was “capital-protected” with 3 to 5 times leverage, and were promised 12 to 19 percent returns; the reality, they allege, was the opposite, with COVID-era losses multiplied. They plan to write to India’s Prime Minister’s Office and to contact the Reserve Bank of India and Bahrain’s central bank, and a complaint has already been filed with the Dubai Financial Services Authority. The DFSA barred the Dubai branch from taking new clients in 2025 after a prior mis-selling of Credit Suisse AT1 bonds to retail customers, and gave HDFC until August 31, 2026, to respond. On Thursday, HDFC shares closed 1.75 percent lower at Rs 714.45. Context on retirement and savings returns helps frame the investor-loss debate. The bank’s own disclosures are on the official HDFC Bank website.
