India's largest private sector lender, HDFC Bank Ltd., is facing complaints of misusing fixed deposits by at least four non-resident Indian customers. These customers have approached the economic offences wing in three cities, claiming fraud by the bank and its officials.
Complaints have been filed in Nagpur, Chandigarh and Gurgaon, two people with direct knowledge of the matter told NDTV Profit. Deposits worth Rs 25-30 crore have been misused to pay for Credit Suisse's Additional Tier-1 bonds by the bank's Middle East operations, the people said.
A first information report may be filed by the EOW as early as next week, the people quoted above said.
According to these people, HDFC Bank officials fraudulently inflated the eligibility of these four NRI customers to get them to sign master service agreements to buy AT-1 bonds. The customers were not duly informed about the risks of these investments, with returns of 12-13% being promised to them. Moreover, they were not given full copies of the agreement to review before signing.
In at least one of the four cases, the annual income figure was inflated from $40,000 to $140,000 by bank officials to ensure that the customer was eligible to buy these bonds, the people quoted above alleged. AT-1 bonds are not readily available for average retail customers to buy. Banks typically sell these bonds to high net-worth individuals.
Delhi-based law AK & Partners is representing the complainants in the matter.
These customers had originally purchased the AT-1 bonds in 2021, which were then completely written off in 2023, after Credit Suisse was acquired by UBS. These customers were also extended loans by the bank, against their AT-1 holdings. After the bonds were written off, the bank adjusted the loans against their fixed deposits, the people quoted above claimed.
The customers have been trying to speak to the bank and resolve this issue since 2023. They have also tried to complain to regulators in India. However, since the AT-1 bonds were purchased in HDFC Bank's middle east offices, the issue of jurisdiction arose.
According to the people quoted above, monetary authorities in the Middle East are currently investigating the matter. Queries mailed to HDFC Bank on Saturday were not immediately responded to.
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