HDFC bank allegedly forced its customers to buy vehicle tracking devices along with their car loans. HDFC imposed the purchase of the GPS tracker from December 2015 to December 2019 because cars loan raise privacy concerns. It costs around Rs 18000-19000 and is a possible breach of non-financial business guidelines for banks. The cost of the devices was included in the loan amount, and car loan raises privacy concerns.
Bank executives pressured auto loan customers to buy a compulsory GPS device that cost around Rs 18000-19000 for about four years ending in December 2019, according to two people who spoke with LiveMint.
“These devices were bundled along with the loan, where reluctant applicants were told that unless they agreed to take this product, their loan would not be sanctioned,” the first of the two told LiveMint.
In July, HDFC bank posted a net profit of Rs 6,658.62 crore on a 19.58 percent year-on-year basis for the quarter ended in June. The amount stood at Rs 5,568.16 crore in the last quarter.
Net interest income of the bank grew by 17.80 percent YoY to Rs 15,665.40 crore in Q1FY21 supported by growth in advances of 20.9 percent, and growth of 24.6 percent in deposits.
The GPS device bundled with a loan was sold by Trackpoint GPS, a Mumbai-based firm. Directors of the company include Amar V. Amin, Carey Bryan Fan, Vinod Ranchhodbhai Amin. California based company Matchpoint GPS Inc is an investor in the Trackpoint GPS.
Data obtained from the registrar of companies (RoC) tell the company’s revenue between FY15 to FY 19 increased by 175times. “It posted a loss of ₹3.87 crores in FY19 on the back of ₹78.31 crore revenues, with expenses overshooting revenues. Trackpoint’s total expenses stood at ₹80.25 crores in FY19, including components such as commission and brokerage of ₹3.49 crore, and legal and professional fees of ₹2.84 crores,” according to the LiveMint.
The company’s sales executive were told to hold meetings with the HDFC officials frequently and achieve sales target for the GPS device. The auto loan book for HDFC bank car loan raise privacy concerns stands at Rs 81,082 crore as on 30 June.
The Bank Regulation Act, 1949 mentions certain businesses a bank can get involved in apart from its lender role. Under the 15 broad sub-categories and the ACT, it clearly states that no banking company shall engage in any form of business that than those referred to in sub-section (1)”.
“We have had a formal tie-up with HDFC Bank to offer this crucial service to their auto loan customers but only as an opt-in model. At no point were we engaging with customers who did not need or want our service,” said Amar Amin, founder, and chief executive, Matchpoint GPS.
According to some experts, lenders could be allowed to promote such devices as an enhanced security feature to cope up with potential loan defaulters where the vehicles lack security.
However, allowing a bank to track its customer vehicles under the loan by justifying it by terming potential ‘loan defaulters’ raises questions of privacy.