Shares of HDFC Bank declined over 0.4% to Rs 1,078.40 on Friday before paring losses as US-based Rosen Law Firm and Schall Law Firm have filed class-action suits against the private lender on alleged misleading public statements and failure to inform investors of improper internal controls on vehicle loans. Both firms had announced probe into claims against HDFC Bank leading to lawsuit.
The lawsuit, filed in the court for the eastern district of New York, alleges that HDFC Bank car loan customers were forced to buy vehicle tracking devices from 2015 to 2019.
The law firm has filed the suit against HDFC Bank, outgoing managing director Aditya Puri, chief executive officer-designate Sashidhar Jagdishan and company secretary Santosh Haldankar. Rosen Law Firm has put up the complaint on its website.
Rosen Law Firm represents investors across the world, concentrating its practice in securities class actions and shareholder derivative litigation.
Last month, the firm announced an investigation of potential securities claims on behalf of shareholders of the bank.
HDFC Bank was looking into alleged improper lending practices in its vehicle financing arm involving the then business head Ashok Khanna.
The lawsuit alleged that the bank failed to disclose it had inadequate disclosure controls and, as a result, maintained improper lending practices in its vehicle-financing operations.
Therefore, the lawsuit said, the bank’s earnings generated from the vehicle-financing operations were unsustainable and the alleged inadequacies, once revealed, were likely to have a material negative impact on the bank’s financial condition and reputation.
As a result, the bank’s public statements were materially false and misleading at all relevant times.
HDFC Bank executives pushed auto loan customers to buy GPS devices costing Rs 18,000- Rs 19,500 from 2015 to December 2019 in a possible breach of guidelines prohibiting banks from non-financial businesses.
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