HDFC Bank share price traded lower on Friday, extending its losses for the third consecutive session, amid sustained selling pressure. HDFC Bank shares fell as much as 1.31% to ₹748.50 apiece on the BSE.
HDFC Bank shares have declined more than 5% in three sessions.
The recent fall in HDFC Bank share price came after a media report earlier this week alleged that the private lender conducted an internal vigilance investigation into interest payments worth ₹45 crore made to a state transport firm.
On May 27, The Indian Express reported that an internal vigilance probe at HDFC Bank examined “differential interest” payments amounting to ₹45 crore made to the Maharashtra State Road Development Corporation (MSRDC).
The news report said that the payments were allegedly structured as ‘differential interest’ linked to deposits from MSRDC. Instead of being directly booked as interest payouts, the money was said to be routed through the bank’s marketing department and shown as contributions towards a road safety awareness campaign involving local vendors.
The report said the investigation was initiated shortly before former chairman Atanu Chakraborty stepped down abruptly on March 18 over what he called “certain happenings and practices within the bank” that were allegedly not in “congruence” with his personal values and ethics.
The newspaper report also claimed that internal records reviewed during the probe pointed to discussions involving senior management, including CEO Jagdishan.
HDFC Bank’s Clarification
Responding to the allegations, HDFC Bank issued a statement defending its governance framework and internal processes.
“We wish to state that in line with the highest corporate governance standards of the Bank, the Internal Audit function conduct reviews, identifies and presents its observations from time to time. As such, the observations of Internal Audit function are comprehensively addressed by the Bank and that applies to the matter in question,” HDFC Bank said in a statement.
It added that this matter did not have a material impact on the financial statements and the internal controls at the Bank were robust.
“The Bank continues to maintain sound financial and risk management practices, with robust systems of internal control and oversight. We remain committed to the highest standards of corporate governance and regulatory compliance,” said the private lender.
Analysts believe that the allegations, if substantiated, are likely to be viewed by markets as a governance and disclosure overhang rather than a one-off accounting issue.
“In the immediate term, HDFC Bank stock may face valuation compression as investors typically discount banks more sharply when questions arise over internal controls, expense classification, and management discipline. Even if the absolute amount is not material to a franchise of HDFC Bank’s scale, the reputational impact can weigh on sentiment, especially in a market that already assigns a premium to trust and execution quality,” said Avinash Gorakshakar, market expert and private wealth management consultant.
Over the medium to long term, he believes the key variable will be whether the bank can demonstrate a clean regulatory response, stronger oversight, and no broader control weakness. He also noted that comparable cases in financial services have shown that valuation damage tends to be temporary when governance lapses are isolated and transparently addressed, but more persistent when they reveal systemic issues.
“For HDFC Bank, credibility recovery will matter as much as earnings delivery,” Gorakshakar added.
HDFC Bank Share Price Performance
HDFC Bank share price has fallen over 14% in three months and has declined 23% on a year-to-date (YTD) basis. The stock has dropped 21% in one year, and has fallen 7% in three years.
At 10:40 AM, HDFC Bank share price was trading 0.16% lower at ₹757.25 apiece on the BSE.
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