Shares of India's largest private sector lender HDFC Bank cracked 2.5 per cent to a fresh 52-week low on Thursday, August 27, after a securities lawsuit was filed in the US against the lender and two senior executives, Sashidhar Jagdishan and Srinivasan Vaidyanathan.
HDFC Bank share price fell to ₹710 apiece on the BSE, a fresh 52-week low, and its market capitalisation (m-cap) also slipped below ₹11 trillion. Nearly Rs 25,000 crore of investor wealth was wiped off today as HDFC Bank's m-cap fell to ₹10.95 trillion from ₹11.20 trillion as of yesterday's close.
On a year-to-date (YTD) basis, HDFC Bank has declined 28 per cent and remains 8 per cent lower in the last five years. According to media reports, investor Jwalant Natvarlal Soneji has accused HDFC Bank and the two executives of misleading investors and has filed a securities fraud class action lawsuit on behalf of investors who purchased HDFC Bank securities between July 17, 2023 and May 26, 2026.
At the centre of the allegations lies the ₹45-crore payments allegedly made by the lender to Maharashtra State Road Development Corp (MSRDC) as marketing expenses to compensate for the interest above that available to other depositors. Abhinav Tiwari, research analyst at Bonanza, said that HDFC Bank’s recent weakness needs to be viewed in the context of two separate legal matters in the US and overseas.
Tiwari highlighted that there has been no court hearing so far in the US lawsuit and the next key procedural date is October 13, 2026, which is the deadline for investors to apply to become lead plaintiff. HDFC Bank has also clarified that shareholder lawsuits of this nature are common in the US, as per reports.
The bank's board in July issued warning letters and imposed a monetary penalty of ₹1 lakh each on three senior executives — MD & CEO Jagdishan; CFO Vaidyanathan; and group head-retail assets Arvind Vohra. The action follows an internal review by a special disciplinary committee of independent directors into the bank’s arrangements with the MSRDC.
"Investors are reportedly consolidating complaints and considering legal action, including approaches to the PMO, RBI and Central Bank of Bahrain. Some investors have already complained to the Dubai Financial Services Authority (DFSA). This matter deserves attention because it has a potential multi-jurisdictional regulatory angle.
It also follows earlier DFSA action against HDFC Bank’s DIFC branch in 2025 over alleged mis-selling of Credit Suisse AT1 bonds," he added. HDFC Bank, however, maintains that it only facilitated the investments and has found no instance of mis-selling.
Ultimately, the stock’s recovery will depend on the headlines, which will provide investor confidence, according to Tiwari. Commenting on the development, Kranthi Bathini of Wealthmills Securities said that while this action could hurt the stock, the impact on the revenue would be limited.
He, however, added that it will surely create reputational challenges for the lender. He believes valuation-wise HDFC Bank looks good and can be considered by medium-to-long-term investors.