HDFC Bank Investigation! Accused of not following proper approach to loans

• There are allegations of disturbances in the vehicle loan unit of the bank

• An internal committee of HDFC Bank investigated this

In terms of market capital in the country, the biggest private sector HDFC bank has also come to light. The vehicle loan lending unit of the bank has complained of ‘non-compliance of proper approach to loan’ and the internal committee of the bank has investigated it.

According to a Bloomberg report, the bank’s vehicle financing arm has been accused of ‘non-compliance with loans’ and ‘conflict of interest’, which has been investigated by an internal committee of the bank.

After the news, HDFC Bank shares fell 2.26 per cent to Rs 1080.40 on Monday. HDFC Bank shares closed at Rs 1105 on Friday. It is worth noting that before this, loan scams have come to light in many banks like PNB, Yes Bank. Therefore, any such news makes investors and customers very alert.

Unit head Ashok Khanna’s tenure did not increase

The bank has not yet made public any information about the progress made in this investigation. The tenure of Ashok Khanna, who was the head of this unit for nearly 18 years, was not extended, whereas earlier this was proposed. About 10 percent of the total loan of HDFC is distributed through this unit.

On the other hand, HDFC Bank says that there is no issue of loan disturbances in this investigation. The bank issued a statement saying, ‘The executives who are being talked about, they were already in service expansion and retired on March 31, 2020 in a normal manner. Whatever complaint comes, the bank has a well established procedure for its investigation and appropriate action is taken accordingly. The bank has also taken appropriate action in the said case. We would like to reiterate that we always adhere to high standards of governance.

A senior HDFC Bank official said, “Actually, there is no such issue as discussed in the Bloomberg report. The executive who is being talked about, his term was over. People were hoping that they would be given extensions, but they retired according to the rules. The investigation that is going on has nothing to do with any loan disbursement, rather it is about ethics. There was some complaint related to ethics, which has been properly investigated by the bank committee.

1.2 lakh crore total auto loan

According to Bloomberg, the vehicle loan unit of HDFC Bank had given a loan of about Rs 1.2 lakh crore as of March 31, 2020.

It was earlier proposed that Khanna’s tenure be extended for at least six months by October. But according to the 63-year-old Khanna Contract, he retired from the bank in March itself. Earlier, Khanna was due to retire in 2017, but then he was given service extension, because vehicle loan unit is very important for the bank. Khanna did not comment on the investigation and said that he has retired according to his contract.

Aditya Puri, the current managing director of HDFC Bank, is about to retire and this inquiry has probably been done in such a way that the bank’s image does not get discounted before he retires.

HDFC Bank MD and CEO Aditya Puri is the highest paid banker in India. He is retiring in October. Puri established the private sector HDFC Bank in India in the nineties. He came from Malaysia to leave a good job at Citibank. In nearly two decades, Puri took the bank forward and made it the lowest NPA bank, keeping it profitable.