The regulator said that after receiving a complaint from a whistle blower it had conducted a examination in the marketing and sale of third-party non-financial products to the bank’s auto loan customers. The regulator said that it had found that the bank was in contravention of regulatory directions.
“The RBI has imposed a monetary penalty of Rs 10 crore on HDFC Bank for contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act,” the regulator said in a statement. “This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.”
Last year it was revealed that some employees at the auto loans department allegedly forced customers to buy GPS devices bundled with car loans. It was found that some customers were not even aware of purchasing such a product till the loan documents were checked. These errant employees started forcefully bundling the GPS devices with car loans to meet sales targets and potentially track borrowers in the event of a default.
ET had earlier reported that HDFC Bank had also terminated at least six senior and mid-level executives after an internal probe revealed that they indulged in practices that were seen to be corrupt and violative of the code of conduct and governance standards of the bank,