HDFC Agents Cease Mobilization of Government Funds
MUMBAI: HDFC Bank, India’s largest private sector lender, has instructed its agents to cease mobilizing fixed deposits and current account, savings account (CASA) funds from government entities, effective July 1, 2026. This decision follows the bank’s recent payment of Rs 45 crore in incentives to the Maharashtra State Road Development Corporation (MSRDC) for fixed deposit mobilizations, which is currently under regulatory scrutiny.
The bank stated that the move to stop its direct selling associates (DSAs) and other agents from sourcing government funds is linked to its expanding branch network across India. HDFC Bank emphasized that this decision is unrelated to any ongoing matters. Sources indicated that the decision to halt sourcing government funds through DSAs was made prior to the MSRDC issue being raised internally.
HDFC Bank acknowledged the contributions of its agents in enhancing its portfolio within the Alternate Banking Channels & Partnerships (ABC&P) segment. The DSA channel was designed to focus on retail acquisition and financial inclusion. The bank’s communication noted that commission payouts were meant for business where agents create incremental sourcing value, avoiding overlap with existing bank-managed relationships.
In recent evaluations, the bank found that a significant portion of business sourced through third-party channels was concentrated in the government segment, particularly in state capitals. Consequently, as part of its evolving business strategy, HDFC Bank has decided to discontinue the use of DSAs and other agents for sourcing CASA and fixed deposit business from government entities. The bank has requested agents to stop such sourcing, stating that no commission payouts will be applicable for these transactions moving forward.
A spokesperson for HDFC Bank clarified that its business correspondent and facilitator network was established to reach underserved areas and provide banking services under regulatory guidelines. With the bank’s branch network expanding to 9,689 branches across 4,175 cities and towns as of March 31, 2026, the decision was made to stop sourcing government business through this network. The business generated through this network is minimal compared to the bank’s overall operations.
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