MUMBAI: HDFC Bank, the largest private sector lender in India, has sent a mail to its agents informing them that effective July 1 they should stop mobilising fixed deposits and current account, savings account (CASA) funds from govt entities. The decision comes close on the heels of the bank paying Rs 45 crore incentive to MSRDC for fixed deposit mobilisations, a move that is currently under regulatory lenses.On its part, HDFC Bank said its decision to stop its direct selling associates (DSAs) and other agents from mobilising funds from govt entities was prompted by the expansion of its branch network across India. And this decision has “no bearing with any other matter”. Sources said that the decision to stop sourcing govt funds through the DSA and other third-party channels was taken much before the MSRDC matter was raised internally.Earlier this week, in a mail from HDFC Bank to its agents, it appreciated the work that they have done in “strengthening the portfolio” in the bank’s ABC&P (Alternate Banking Channels & Partnerships) channel and “driving deeper market penetration.” Its DSA channel was “established with a focus on granular retail acquisition and financial inclusion.” For this channel, commission payouts were “intended for business where incremental sourcing value is created through agent intervention, while avoiding overlap with existing bank-managed relationships,” the mail noted.In recent months, as the bank reviewed “the business generated, along with operational, regulatory, strategic and reputational considerations associated with third party sourced business, (it was observed) that a significant portion of business sourcing done pertains to the govt segment, especially in state capitals.” Accordingly, as part of the bank’s evolving business strategy and governance framework, it now intended “to cease availing the services” from DSAs and other agents “for sourcing under CASA and (FD) business of govt entities”. Hence, the bank asked its agents “to stop sourcing the CASA and (FD) business of govt entities for the bank” effective July 1, 2026, the mail noted.“We request you to please take note that no commission payout shall be applicable for CASA and (FD) business sourcing under (the govt) segment going forward even where such sourcing got done inadvertently,” the mail to the agents noted. In response to TOI’s queries in this matter, a bank’s spokesperson said that its business correspondent/business facilitator network “was formed with the objective of reaching deep geographies and unpenetrated segments. This network as a model provides financial and banking services under the extant regulatory guidelines and complements our branch network.” With the expansion of the bank’s branch network-9,689 branches across 4,175 cities & towns as of March 31, 2026, the bank has now “decided to stop sourcing govt business through this network,” the email said. The business sourced through this network is insignificant compared to the overall business of the bank, and it took a decision some weeks ago to utilise the business correspondent and business facilitator network for retail deposit sourcing.
