HDFC Bank didn’t flag forgery: whistleblower
MUMBAI: India’s largest private lender HDFC Bank Ltd levied a fee to deter customers who submitted forged documents to obtain loans instead of reporting them to law enforcement, a whistleblower alleged in his complaint to the Reserve Bank of India.
According to the complaint filed with the regulator in July, on finding out a customer has applied using forged documents, the bank demanded a fine and called it a “processing fee”. The whistleblower, who had also pursued the case of HDFC Bank bundling global positioning system (GPS) devices along with auto loans, alleged the bank has not been reporting such instances to law enforcement.
The fee was charged only in some cases as a deterrent, a person aware of the development said on condition of anonymity.
In response to Mint’s queries, an HDFC Bank spokesperson said in case any suspected or discrepant document is identified in the application, the bank takes steps that include declining the application and allowing the customer an opportunity to clarify the discrepancies.
“However, we have largely observed in such cases that customers usually do not respond. All such applications are uploaded in the bank’s internal negative database so that future applications from such customers may be identified and prevented,” the spokesperson said.
The spokesperson added that all the cases are fully reported, without exception, on the Hu.nter database of Experian, a potential suspected fraud database, and on the basis of the said submissions, other financial institutions are protected from applications made by such persons. “The processing fees are not waived in such cases, even if the customer responds and engages in discussion. This is because the process of rejection comes after an extensive investment of time, effort and costs to identify such discrepancies,” he said.
The spokesperson said that in a number of cases the bank also files police complaints, in addition to and despite having collected the processing charges.
Lawyers said some provisions allow banks to charge default interest to borrowers if the fraud is detected after the loan has been disbursed. Legal experts said forgery of documents is a serious offence, and its different classes are defined under Section 465 to 477 of the Indian Penal Code.