HDFC Bank Under Investigation for Misuse of NRI Customers Fixed Deposits

HDFC Bank is facing serious questions after at least four Non-Resident Indian (NRI) customers accused the bank of misusing their fixed deposits. The complaints have been filed with the Economic Offences Wing (EOW) in Nagpur, Chandigarh, and Gurgaon, according to a report by NDTV Profit. Recently, HDFC Bank CEO Sashidhar Jagdishan has also been named in Rs.6 Crore Fraud Complaint in Nagpur.

What Is the Case About?

The report claims that Rs 25 to 30 crore worth of fixed deposits belonging to NRI customers were used without their consent by HDFC Bank’s Middle East branches. The money was allegedly used to invest in AT-1 bonds issued by Credit Suisse, a type of high-risk financial product usually meant for wealthy investors. An FIR (First Information Report) in this case could be filed as early as next week.

What Are AT-1 Bonds and What Went Wrong?

AT-1 (Additional Tier-1) bonds are risky financial instruments. They are often used by banks to raise capital and are only meant for investors who understand and can handle high risk. In this case:

• The bank allegedly inflated the income details of its NRI customers to make them look eligible to buy AT-1 bonds.
• In one example, a customer’s real income of $40,000 was falsely shown as $140,000.
• The customers were promised returns of 12–13%, but were not told about the risks involved.
• Many customers did not receive full copies of the documents (called Master Service Agreements) before signing.

These AT-1 bonds were bought in 2021, but in 2023, they became worthless (written off) when Credit Suisse was taken over by UBS, another global bank.

To recover the money lost, HDFC Bank reportedly used the customers’ fixed deposits to settle the loan amounts they had taken for buying the bonds. This means that their own savings were taken without their full understanding or consent.

The affected NRI customers have been trying to solve the issue with the bank since 2023, but have not received a proper resolution. They even approached Indian financial regulators. However, because the transactions were done through the bank’s Middle East branches, the issue of jurisdiction (who has the authority to act) has created complications.

Meanwhile, financial authorities in the Middle East have reportedly started their own investigation into the case.

What’s Next?

With multiple complaints filed, and investigations going on both in India and abroad, HDFC Bank is under growing pressure. If the FIR is registered, the case will enter the legal process, and further details may come out through the investigations. HDFC Bank is undergoing several legal cases apart from this. Click here to read.