HDFC Bank denies fraud allegations by Lilavati Trust; calls them smear campaign to avoid loan repayment
HDFC Bank has issued a strong rebuttal against allegations of financial fraud targeting the bank and its CEO, Sashidhar Jagdishan. In a statement on Sunday, the bank asserted these accusations are part of a campaign by "unscrupulous persons" abusing the legal system to obstruct the recovery of a long-standing loan from defaulters, specifically Splendour Gems Limited (formerly Beautiful Diamonds Limited).
The allegations stem from a complaint by the Lilavati Kirtilal Mehta Medical Trust (LKMM Trust). The trust accuses Jagdishan of accepting a significant sum to harass the father of a trust member, presenting handwritten diary entries as purported evidence. The trust seeks punitive action against the CEO, including suspension and prosecution.
HDFC Bank firmly denies all accusations, labeling them "completely false, outrageous, malicious, and baseless." It links the complaint directly to its efforts to recover dues from Splendour Gems, owned by the Mehta family.
According to the bank, Splendour Gems defaulted in 2001 on loan facilities granted in 1995 by an HDFC-led consortium. Despite a 2004 Debt Recovery Tribunal certificate and subsequent enforcement actions, the bank says, the outstanding amount owed to HDFC Bank alone, including interest, stood at approximately ₹65.22 crore as of May 31, 2025.
The bank states that members of the Mehta family have repeatedly initiated legal actions (criminal complaints, minority rights petitions, regulatory representations) against HDFC Bank and its officials. These actions, it claims, have been dismissed or are under challenge. The latest trust complaint is seen as another retaliatory move with "mala fide intention" solely aimed at evading repayment.
HDFC Bank sees this as a deliberate escalation to personal attacks against Jagdishan, designed to "malign reputation," "intimidate" the bank, and create a "calculated distraction" from their liabilities after exhausting legal avenues.
The bank strongly condemned the allegations as a "gross misuse of the legal process" and reiterated its commitment to high corporate governance standards. it highlighted its "robust internal controls and compliance mechanisms," and emphasised that its governance framework ensures "transparency, accountability, and ethical conduct."
HDFC Bank has said that it will "pursue all lawful remedies" to recover the funds and defend the reputation of the bank, its directors, and employees.
The LKMM Trust has also levelled charges against eight individuals, including former office bearers, for alleged embezzlement. These broader charges include financial fraud, criminal conspiracy, abuse of fiduciary position, evidence tampering, and obstruction of justice, based on a recent court order and FIR.
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