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HDFC Bank on Monday said an internal review into its arrangement with the Maharashtra State Road Development Corporation (MSRDC) for garnering deposits found that the conduct of employees involved amounted to business overreach and not any mala fide action, personal enrichment or improper motive.
Based on the findings and recommendations of a Special Disciplinary Committee of Independent Directors, the bank's Board, at its meeting held on July 23, decided to issue warning letters and impose a monetary penalty of Rs 1 lakh each on three senior employees -- Managing Director & CEO, Chief Financial Officer and Group Head-Retail Assets. The remaining employees involved will receive warning letters. "The Board... concluded that the conduct of the employees involved constituted business overreach rather than any mala fide action, personal enrichment, or improper motive," HDFC Bank said in a public statement. The bank said that, while there could have been "potential divergence with the applicable RBI Directions," the Board acted on the recommendations of the Special Disciplinary Committee and also directed that the matter be communicated to the Reserve Bank of India. The issue relates to HDFC Bank's arrangements with MSRDC for garnering deposits in 2017 and 2021. Earlier this year, some reports had alleged that the bank used marketing expenditure in connection with the deposit arrangement, raising questions over compliance with RBI's deposit pricing directions. Following the allegations, HDFC Bank constituted a Special Disciplinary Committee of Independent Directors to examine the matter. Following the review, the Board concluded that the case did not involve misconduct for personal gain but warranted disciplinary action in view of the potential regulatory divergence. The bank said it has informed the RBI of the Board's decision. The share price of HDFC Bank on the National Stock Exchange closed at Rs 740/share on Monday. (ANI)
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