InvestorQ : What exactly was the issue with the vehicle loans business of HDFC Bank for which an investigation is currently on?
Deepa Salunkhe made post

What exactly was the issue with the vehicle loans business of HDFC Bank for which an investigation is currently on?

Answer
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Juvina Maggie answered.
3 months ago


While the details are still awaited, reportedly car loan customers of HDFC Bank were forced to purchase a vehicle tracking device in a possible breach of guidelines that prohibits banks from non-financial businesses. This consistently happened for 4 years from 2015 to 2019. HDFC Bank has taken action against employees involved in this illegitimate act.

Auto loan customers of HDFC Bank were forced to buy GPS devices costing about Rs.20,000 between 2015 and 2019 and the cost of the device was added to the loan amount. Loan sanctions were held up where devices were not bundled. The GPS tracking device was sold by Trackpoint GPS, a Mumbai-based company. They got captive customers from HDFC Bank.

Trackpoint has confirmed that they did have a formal tie-up with HDFC Bank to offer this GPS tracking to auto loan customers but only as an opt-in model. HDFC Bank’s auto loan book stood at Rs.81,082 crore as on 30 June, and constituted 17% of its retail loans. Ashok Khanna, was the group head of secured vehicle loans and he had left in Mar-20.

While the additional service may have been outside the purview of a bank, not all dismiss this service as irrelevant. Some believe that the bank could be within rights to track the location of the vehicle on security grounds. The problem appears to be that this product was being pushed by a few officials of the bank without knowledge of top management.