HDFC Bank penalises 12 execs for role in mis-selling AT1 bonds

HDFC Bank has penalised at least 12 senior and mid-level executives for their alleged role in the mis-selling of additional tier-1 (AT1) bonds linked to Credit Suisse, two people aware of the development said. The action includes cancellation of increments and employee stock options (ESOPs) for those implicated. Among those facing action is Ashish Parthasarthy, group head of branch banking, payments, treasury, liability products and marketing. HDFC Bank did not respond to an emailed request for comment.The latest penalties follow a series of accountability actions the bank has taken in connection with the AT1 bond controversy. As ET reported on March 21, HDFC Bank had sacked three senior executives — including group head of branch banking Sampath Kumar — along with two others, Harsh Gupta and Payal Mandhyan, following internal findings.

Gupta, executive vice president for the Middle East, Africa and NRI onshore business, and Mandhyan had been suspended in January 2025 after the bank initiated an internal probe into alleged mis-selling of debt products at its Dubai branch. Investigations showed that several AT1 bond investors had alleged they were encouraged to move their foreign currency non-resident (FCNR) deposits from India to Bahrain. The controversy goes back to March 2023, when Swiss authorities wrote down Credit Suisse’s AT1 bonds to zero as part of its emergency takeover by UBS, wiping out investors who held these quasi-equity instruments. AT1 bonds have been written off during bank bailouts in multiple geographies, including India.

Despite the personnel actions, HDFC Bank managing director and CEO Sashidhar Jagdishan has maintained that no fraud was committed.

“In June 2023, the Dubai Financial Services Authority clarified that clients who are continuously engaged in Dubai must also be onboarded there, even if accounts are booked in Bahrain,” Jagdishan told ET on March 23. “Our assessment is that this was a technical lapse in documentation and regulatory interpretation — not fraud or mis-selling. We initiated an internal review and took staff accountability actions through our disciplinary and board-level committees, with a right to appeal. There is no fraud, no misappropriation, and no integrity issue that has surfaced so far.”

HDFC Bank Penalises 12 Execs

“Appropriate remedial actions have been taken in line with internal policies. Personnel changes have been undertaken along with appropriate action as per the bank’s conduct regulation,” it said on March 21.

The regulatory fallout had already become public in September 2025, when HDFC Bank disclosed that the Dubai Financial Services Authority had barred its DIFC branch from onboarding new clients or undertaking fresh business. The prohibition followed non-compliance with regulatory requirements related to servicing clients not onboarded through the DIFC entity, as well as lapses in advisory and credit arrangement practices.The branch remains prohibited from soliciting or conducting business with new clients across financial services including advising on financial products, arranging investment deals, extending or advising on credit, and custody-related activities.