Why are HDFC Bank shares falling? US class-action lawsuit explained, bank responds

US lawsuit: HDFC Bank faced selling pressure after an investor filed a class-action complaint in New York, covering investors who purchased or acquired HDFC securities between July 2023 and May 2026.
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Dado Ruvic

HDFC Bank shares remained under pressure on Thursday, leading the losers on the Nifty 50, amid a US class-action lawsuit alleging that the bank violated foreign securities laws and caused losses to investors.

At 9.48 am, the stock traded at ₹721.20 on the NSE, after hitting a low of ₹717.10 against the previous close of ₹727.20. Total buy quantity stood at 15,84,699, while sell quantity was 17,45,505.

In the pre-open session, it traded at ₹734 level.

HDFC Bank shares in focus

Trading data

The traded volume of the stock was 72.75 lakh, with traded value at ₹524.37 crore at the time of writing. The total market capitalisation stood at ₹11.11 lakh crore, while the adjusted P/E ratio was 13.99.

The stock’s absolute returns for a week dipped 0.58 per cent, while returns for one month were down 2.53 per cent.

US class action

Reports suggest that the private lender bank faces a class-action lawsuit in New York alleging that the bank violated American securities laws, resulting in losses to investors.

An HDFC Bank investor filed a securities fraud class-action complaint on August 13, 2026, in the US District Court for the Southern District of New York against the lender. It seeks represent investors who purchased or acquired HDFC securities between July 17, 2023, and May 26, 2026.

HDFC Bank responds

HDFC Bank has reportedly rejected the US shareholder class-action lawsuit as “without merit” and said it intends to vigorously defend itself. According to reports, the bank said such shareholder lawsuits are “incredibly common” in the US after a company experiences a stock drop, adding that many US-listed companies routinely defend such cases each year.

“The Bank believes the lawsuit is without merit and intends to vigorously defend itself,” it said.

What the lawsuit alleges

The lawsuit was filed by Glancy Prongay Wolke & Rotter LLP (GPWR)t. The complaint alleges that the defendants made materially false or misleading statements and failed to disclose material adverse facts about HDFC Bank’s business, operations and prospects.

The complaint specifically alleges that HDFC Bank camouflaged payments as marketing expenditure to pay higher interest to a state firm in order to induce deposits. It further alleges that these activities were approved by senior management.

The lawsuit also alleges that the activities likely violated regulations and HDFC Bank’s own policies, including policies prohibiting payments that could constitute improper inducement.

According to the law firm, the complaint alleges that the activities resulted in HDFC Bank’s interest income and operating expenses being overstated. It further alleges that the defendants’ positive statements about the company’s business, operations and prospects were materially misleading or lacked a reasonable basis.

The law firm said that on March 18, 2026, during US market hours, HDFC filed a letter with the Bombay Stock Exchange and the National Stock Exchange of India Limited reporting the resignation of Atanu Chakraborty from his roles as part-time Chairman and Independent Director of HDFC.

According to the law firm, the company’s letter attached Chakraborty’s resignation letter, which stated that certain happenings and practices within the bank that he had observed over the previous two years were not in congruence with his personal values and ethics, and that this was the basis for his decision.

The law firm said HDFC’s American Depositary Shares (ADS) fell $2.09, or 7.28 per cent, to close at $26.62 per share on March 18, 2026, on unusually heavy trading volume.

The firm also noted the report claiming HDFC Bank had made covert payments of approximately ₹45 crore, or approximately $4.7 million, to the Maharashtra State Road Development Corporation (MSRDC) to induce MSRDC to make large deposits with the bank.

According to the report cited by the law firm, HDFC Bank offered MSRDC 6.01 per cent interest, a 2.51 per cent markup over the interest offered to other savings accounts. The markup was allegedly paid by disguising it as sponsorship payments for a road safety awareness campaign run by MSRDC.

The law firm further said the report stated that an internal probe in March and April 2026 concluded that over ten top officials bore responsibility, including HDFC Bank CEO Sashidhar Jagdishan.

The information provided does not include HDFC Bank’s response to these allegations.

Separately, Levi & Korsinsky, LLP alerted HDFC Bank’s stockholders of securities class action.

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Published on August 27, 2026