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HDFC Bank to refund GPS device charges to customers

RBI had imposed a  ₹10 crore fine last month on the lender after an examination of documents pertaining to allegations of improper lending practices in its vehicle-financing operations.Premium
RBI had imposed a 10 crore fine last month on the lender after an examination of documents pertaining to allegations of improper lending practices in its vehicle-financing operations.

  • The private lender had pushed auto loan customers to buy the devices for 18,000 to 19,500
  • The bank conducted an internal probe into the car loan biz, after receiving a complaint from a whistleblower

MUMBAI : India’s largest private-sector lender, HDFC Bank Ltd, on Thursday said that it will refund commissions to auto loan customers who had “availed of" a bundled GPS device between FY14 and FY20.

Mint had reported on 20 July 2020 that car loan customers of HDFC Bank were forced to purchase a vehicle tracking device in a possible breach of guidelines prohibiting banks from non-financial businesses. HDFC Bank executives, Mint had reported, pushed auto loan customers to buy GPS devices for 18,000-19,500 from 2015 to December 2019. The device in question was sold by Trackpoint GPS, a Mumbai-based firm.

“The refund will be credited to the customer’s repayment bank account as registered with the bank," the bank said in a newspaper advertisement.

This comes after the Reserve Bank of India (RBI) last month imposed a 10 crore fine on the lender after an examination of documents pertaining to allegations of improper lending practices in its vehicle-financing operations.

The bank had conducted an internal investigation into the car loan business, after receiving a whistleblower complaint, and had taken disciplinary action against employees found to have been involved in “personal misconduct", the then managing director and chief executive officer of HDFC Bank, Aditya Puri, had told shareholders at the annual general body meeting in July last year.

The bank also said on Thursday that it will do whatever it takes to ramp up the digital banking infrastructure. The private lender has been plagued with digital disruptions because of a variety of reasons and said that it is making investments in newer technologies to scale up.

“We are very focused on making these investments. Whatever it takes, we are very focused to make these as they are the right set of technology investments," said Ramesh Lakshminarayanan, the bank’s chief information officer.

The bank is witnessing a shift in the way one approaches technology, Lakshminarayanan said. These days, concepts such as elastic scaling, on demand scaling, container-ready and cloud-native architecture have become the need of the hour, he said.

“While we have seen some outages in the last couple of years, that does not mean we are not investing in or looking at the whole existing technology piece. That is an area we are constantly improving and monitoring," Lakshminarayanan said.

HDFC Bank customers expect a certain quality and a gold standard, which the bank probably has not lived up to, according to Lakshminarayanan. The changes being made will soon reflect in the customer experience, he said.

There would be changes in customer payments and call centre experiences in the 15-18 month period starting at the end of this year and the beginning of next year, he said.

In December, RBI had ordered HDFC Bank to freeze new digital banking initiatives and credit card issuances until it addressed the lapses that had caused multiple glitches in its internet and mobile banking systems over the past two years.

In February this year, the regulator appointed an external firm to conduct a special audit of the entire information technology (IT) infrastructure of the bank.

Lakshminarayanan said the bank has completed all assessments and the matter is with the regulator.

The bank’s mobile application again faced an outage on 15 June, though the lender was able to fix it soon

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