India's HDFC Bank slips to 2-1/2-year low as legal, leadership woes linger

HDFC Bank

27/08/2026 10:13

Stock down 28% this year, on track for worst annual decline since 2008
Legal, regulatory issues, delay in CEO reappointment worry investors
Macquarie says 3-year CEO renewal could ease uncertainty, temporary extension may deepen pressure
By Bharath Rajeswaran and Vivek Kumar M
Aug 27 (Reuters) - Shares of HDFC Bank HDBK.NS, India's top private lender, fell for a third straight session on Thursday, dragging the country's benchmark stock index amid concerns over legal, regulatory and leadership challenges.
The shares slipped as much as 2.37% to 710 rupees, a 29-month low, extending their year-to-date decline to about 28%, on course for their worst annual drop since 2008.
HDFC Bank is the heaviest-weighted stock on the benchmark Nifty 50 .NSEI, which has fallen 7.6% this year.
The lender is facing a possible U.S. class-action lawsuit over alleged illegal payments worth 450 million rupees ($4.7 million) to Maharashtra State Road Development Corporation to induce large deposits.
On August 13, Glancy Prongay Wolke & Rotter and the Law Offices of Howard G. Smith, filed a proposed federal securities class action in a U.S. District Court against HDFC Bank and two of its executives over the alleged illegal payments. Several other law firms have also issued alerts to HDFC Bank investors regarding the proposed class action.
"The U.S. class-action lawsuit has emerged as a near-term overhang, denting sentiment and tempering investor optimism despite the stock's attractive valuations," said Aishvarya Dadheech, founder and chief investment officer at Fident Asset Management.
"The Street is likely to remain cautious until further details emerge."
An HDFC Bank spokesperson told Reuters that the bank "believes the lawsuit is without merit and intends to vigorously defend itself."
"In the United States, these types of shareholder lawsuits are incredibly common after a company experiences a stock drop, and many companies listed in the U.S. routinely defend these lawsuits each year," the spokesperson said. 
Earlier this week, Mint newspaper reported, citing investors, that more than 75 clients who bought Carlisle's Luxembourg Life Fund through HDFC Bank's Dubai operations were planning to approach the Indian Prime Minister's Office, the central bank and overseas regulators over alleged mis-selling, losses and delayed redemptions. 
HDFC Bank told Reuters it does not provide any advice in relation to third party products and that it was ultimately for the customers to make their own informed decisions.
 
The lender's shares had slid in March after its part-time chair abruptly resigned citing ethical differences with management.
Uncertainty over chief executive Sashidhar Jagdishan's tenure also remains an overhang for the stock, traders said. Jagdishan's term ends on October 26.
A temporary extension would prolong succession concerns and could pressure the stock further, while a three-year renewal would remove a key uncertainty, Macquarie said.
The bank did not respond to a query on the CEO reappointment.
       

 (Reporting by Bharath Rajeswaran and Vivek Kumar M in Bengaluru; Editing by Mrigank Dhaniwala)
 ((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))