For non-compliance with some norms, the National Housing Bank (NHB) has imposed a fine of Rs 4.75 lakh on Housing Development Finance Corporation Ltd (HDFC), according to the country’s largest mortgage lender.
How Did This Happen?
During a regulatory filing on Tuesday, HDFC said “this is to inform you that NHB has on July 5, 2021, (Monday) imposed a monetary penalty of Rs 4,75,000 plus GST on the Corporation for technical non-compliance with NHB circulars,”.
Basically, the circulars belonged to November 2013 and July 2016.
Further, HDFC said, “the Corporation will be taking necessary steps to comply with the said letter,” in reference to the matter leading to the imposition of a fine.
On Tuesday, with the closing bell, HDFC’s shares closed flat at Rs 2,493.30 apiece on the BSE.
HDFC Auto Loan-GPS Bundling Controversy
Prior to this, HDFCc was caught in auto loan-GPS bundling controversy during June this year.
At that time, HDFC bank’s new managing director and chief executive officer (CEO) Sashidhar Jagdishan has clarified that necessary action was taken concerning the auto loan-GPS bundling controversy.
The bank’s annual report for 2020-21 said, “We conducted a probe and took necessary actions based on its findings. Actions including termination of certain employees’ services and arrangement with the vendor were taken,”.
Further, HDFC’s CEO said that the bank will comply with the norms laid down by the Reserve Bank of India and pay the Rs 10 crore penalty.
He added, “We have been asked to pay a penalty of Rs 10 crore and have also been instructed to repay the commission that we earned from the process to the customers. We accept this verdict and will comply with the directives,”.
Actually, the car loan customers of the HDFC Bank were “forced” to purchase a vehicle tracking device between 2015 and 2019.
In 2019, the issue was flagged by a whistleblower who added that the practice breaches section 6(2) and section 8 of the Banking Regulation Act of 1949, which prohibits banks from carrying out non-financial businesses.
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