HDFC Bank stocks fall 3% on the back of probe into auto loan unit
1 min read 14 Jul 2020, 11:35 AM ISTHDFC Bank initiated the probe after allegations surfaced around a former executive's professional conduct at the unit The bank's auto loan book had stood at ₹83,935 crore as of March 31, 2020, constituting less than a fifth of the overall retail book
PremiumMUMBAI: Shares of HDFC Bank fell by as much as 2.74% on Tuesday after it launched a probe into its auto lending practices following allegations against the conduct of a long-time executive who retired on March 31 this year.
At 11:10 am, HDFC Bank was trading at ₹1,053.55 down 2.49% from its previous close, while the benchmark index, Sensex was down 1.54% to 36,127.04.
"We would like to state that the executive concerned who was on an extension of service retired on March 31, 2020 in the normal course of his employment. The bank has a well established process of investigating every complaint that it receives and takes actions as appropriate," an HDFC Bank spokesperson said.
The auto loan book had stood at ₹83,935 crore as of March 31, 2020, constituting less than a fifth of the overall retail book. The auto loans had grown by only 4.04% in FY2020 as against the 14.61% growth in the overall retail advances. It can be noted that auto sales were also in the slow lane for much of the year.
The allegations pertain largely to the professional conduct which raises issues about possible conflicts of interest, stressing the quality of the bank's auto loan book is strong.
At the end of the March quarter, HDFC bank had reported a 17.7% rise in net profit to ₹6,928 crore, against ₹5,885 crore in the year-ago period. Provisioning rose to ₹3,784.5 crore against ₹3,043.6 crore in the previous quarter and ₹1,889 crore in the year-ago period. The bank had made additional provisions of ₹1,550 crore because of the covid-19 impact.
HDFC Bank aims to raise ₹50,000 crore by way of additional tier 1 and tier 2 bonds besides long-term bonds for financing its infrastructure and affordable housing business. It also aims to raise another ₹10,000-13,000 crore by the end of 2020 and is in the process of appointing investment bankers for the same.
