HDFC bank denies allegations of not flagging forgery to authorities

Private sector lender HDFC Bank, on October 1, denied allegations that it didn't report fake loan applications to law enforcement authorities after charging processing fee from such customers.

"The bank categorically states once such applications are identified to be discrepant / suspicious, the bank attempts to provide an opportunity to these people to come and clarify," the bank said in a statement responding to a query from Moneycontrol.

However, in number of cases, applicants do not respond, the bank said, adding in all cases, the bank without exception, declines the loan application and update the case in internal data base to prevent any future application from the customer.

Also, industry data base is updated to helps prevents such borrowers from indulging in such practises with any other banks, NBFCs & Financial Institutions, the bank said.

Earlier, news report appeared in Mint newspaper cited a whistleblower letter to the regulator that alleged that HDFC Bank didn't report fake loan applications to authorities and even charged processing fee in such cases.

"The Bank does not waive the processing costs from customers who come forward in such discrepant/suspicious cases. The processing fee is charged towards defraying the cost of efforts of the bank for additional due diligence and verification and not for closing the cases," the bank said.

Also, collection or non-collection of processing fees has no bearing on reporting to the internal & Hunter database (industry database) or attempts to report to the Police authorities, the bank said. "In fact, the Bank files police complaints in a number of cases, where processing cost was paid by individuals," HDFC Bank said.

In May this year, the Reserve Bank of India had imposed Rs 10 crore monetary penalty on HDFC Bank for violation of certain rules.

An examination of documents in the matter of marketing and sale of third-party non-financial products to the bank’s customers, arising from a whistleblower complaint to RBI regarding irregularities in the auto loan portfolio of the bank, revealed contravention of the aforesaid provisions of the Act and the regulatory directions, the RBI had said.