HDFC Bank is under scrutiny following complaints from at least four NRI customers alleging fraudulent use of their fixed deposits, NDTV Profit reported on Saturday. The complaints have been lodged with the Economic Offences Wing (EOW) in Nagpur, Chandigarh and Gurgaon, two sources with direct knowledge of the matter told NDTV Profit.
According to the report, deposits worth Rs 25–30 crore were allegedly misused by the bank’s Middle East operations to pay for Additional Tier-1 (AT-1) bonds issued by Credit Suisse. An FIR in the matter could be registered as early as next week, the NDTV report stated.
The bank officials are accused of inflating income details of these NRI clients to qualify them for AT-1 bond purchases, an investment instrument typically reserved for high net-worth individuals. In one case, the customer’s annual income was falsely raised from $40,000 to $140,000, the report claimed.
The customers were allegedly promised returns of 12–13% but not informed about the risks of AT-1 bonds. They also reportedly did not receive full copies of the Master Service Agreements before signing.
Purchased in 2021, the AT-1 bonds were completely written off in 2023 after Credit Suisse was acquired by UBS. HDFC Bank had extended loans against these bonds, which were later adjusted against the customers’ fixed deposits after the bonds were written off, the report further stated.
The affected customers have been attempting to resolve the issue with the bank since 2023 and have approached regulators in India. However, complications arose due to the bonds being purchased via the bank’s Middle East branches, raising questions of jurisdiction.
According to the NDTV Profit report, monetary authorities in the Middle East have launched their own investigation into the matter.
