US law firm to study class action claims against HDFC Bank

Rosen Law in a statement said it was preparing a securities lawsuit “on behalf of HDFC Bank shareholders” and invited shareholders to join it.

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The firm is relying on several media reports in the past which have stated that the bank had conducted a probe into improper practices at its vehicle lending unit.
ET Spotlight
Mumbai: A US law firm said it would investigate potential securities class action claims against HDFC Bank after allegations that the private lender might have issued materially misleading business information to investors.

Rosen Law in a statement said it was preparing a securities lawsuit “on behalf of HDFC Bank shareholders” and invited shareholders to join it.

HDFC Bank said the move looked frivolous. “We were unaware of any such development (class action lawsuit) till we heard about it from the media a little earlier today. We are getting details of it. We’ll examine it and respond to it as appropriate. Prima facie it does look frivolous as we believe we have been transparent in our disclosures,” the bank said in an emailed response to ET’s questions.


The law firm did not respond to an email seeking comment. It is relying on media reports about a probe conducted by the bank. An ET report on July 13 stated that the lender had found conflict of interests in its vehicle financing operations. After this report, HDFC Bank’s American Depositary Receipt price fell $1.37, or 2.83%, the law firm said.

A recent report by Bloomberg stated that consumer credit company Experian’s India unit had informed the RBI that HDFC Bank had been late in providing details of its loans, including loan repayments status, of its borrowers.

Last year, Rosen Law had prepared a similar class action suit against Infosys, after a whistle blower alleged malpractices by a few key management personnel. The suit was dismissed in May this year.
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ET in its June 20 edition reported that HDFC Bank terminated at least six senior and mid-level executives after an internal probe revealed that they indulged in practices that iolated the code of conduct and governance standards of the bank.

This pertained to the auto loans department where some staff pushed GPS devices in lieu for auto loans.

Some errant employees had started forcefully bundling these products with car loans to meet sales targets and potentially track borrowers in the event of a default.

Speaking at the bank’s annual general meeting last month, managing director Aditya Puri had denied any "conflict of interest" in the operations.
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“We had received some whistle-blowing complaints; internal enquiries carried out in the matter on the complaints received has not brought out any conflict of interest issue nor does it have any bearing on our loan portfolio,” Puri had said.


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