Hyderabad: India’s largest private sector lender HDFC Bank Ltd on Monday came under the scanner of a US-based law firm over allegations of issuing misleading business information to its investors.
Rosen Law Firm, which works for global investor rights, announced in a press release issued on Sunday that it is launching an investigation of potential securities claims on behalf of shareholders of HDFC Bank.
The potential lawsuit is being based on several media reports, one of which highlights HDFC Bank’s improper practices at its vehicle lending unit.
Reportedly, an internal audit by HDFC Bank revealed that the lender’s car loan customers were given GPS devices by bundling them in auto loans without their knowledge. This was in violation with the code of conduct and governance rules that prohibit the bank’s employees to indulge in non-financial businesses.
“On this news, HDFC Bank’s American depositary receipt price fell $1.37 per share, or 2.83%, to close at $47.02 per share on 13 July 2020,” Rosen Law noted in the statement.
The lawsuit is also taking into account a media report that said earlier this month that Experian Plc’s Indian unit had informed the Reserve Bank of India (RBI) that “HDFC Bank has been late in providing details of its loans, including the repayment status of its millions of retail borrowers” and that “[s]uch tardiness has been an issue for about two years”. Experian is a global information services company that provides data and analytical tools to investors across the world.
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Rosen Law also said that shareholders suffered after HDFC Bank reported its financial results for the first quarter of the FY 2021 that missed analyst estimates with respect to net profit, while also reporting a deterioration in asset quality.
In a response to a query by ETV Bharat, HDFC Bank said: “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,” it added.
Meanwhile, Rosen Law Firm has also asked HDFC Bank’s investors to join the class action lawsuit by providing the details of their share ownership. “If you purchased securities of HDFC Bank, please visit the firm’s website at http://www.rosenlegal.com/cases-register-1922.html to join the securities action,” it said on its website.
The law firm was in news last year when it had said that it was preparing a similar class action lawsuit against IT firm Infosys Ltd after an anonymous whistleblower group accused the management of boosting short-term revenue and profits by taking “unethical” steps. However, the lawsuit was dismissed later.
(ETV Bharat Report)
