HDFC Bank to refund GPS device commissions to auto loan customers

HDFC Bank on Thursday said that it will refund commissions to auto loan customers who availed of bundled GPS devices as a part of the auto loan funding during the period FY14-FY20.

In a public notice, the bank said, the refund will be credited to the customer's repayment account as registered with the bank.

"In case of any queries or in case such a bank account is closed, such customers are requested to contact the bank from their registered email id or call on the numbers with detail of the loan account number within the next 30 days," the bank said.

The Reserve Bank of India (RBI) had imposed a monetary penalty of Rs 10 crore on country’s largest private sector lender, HDFC Bank, for violating regulatory compliance in the auto loan case.

The RBI took action after it received a whistleblower complaint regarding irregularities in the auto loan portfolio of the bank.

It was alleged that HDFC Bank was misselling GPS products to its auto loan customers and the cost of such devices was being added to the loan amount. The bank conducted an internal enquiry into the matter and stated that appropriate action was taken against individuals involved in that division of the bank.

According to the allegations, executives of the bank sold GPS devices bundling them with auto loans to achieve sales targets between the years 2015 and 2019.

Also, last year, in September, US-based Rosen Law Firm and Schall Law Firm filed class-action lawsuits against HDFC Bank, accusing the private lender of failing to reveal to investors about improper lending practices at its vehicle loans unit and making misleading statements. The lawsuit also named Aditya Puri, the erstwhile MD& CEO of the bank,  Sashidhar Jagdishan, the current MD& CEO, and Company Secretary Santosh Haldankar.