HDFC Bank is taking action against employees who were engaged in making temporary deposit accounts to increase the quarterly figures.
Nidhi | May 1, 2025 |
HDFC Bank is taking strict action on employees who were involved in making temporary deposit accounts to boost the quarterly figures, as per a report that verified a March-end internal email sent by the bank.
As per the email, while the bank was conducting its internal checks, it was found that some employees had created temporary deposit accounts, such as savings or term deposits, by using CCOD (cash credit, overdraft) even though there was no real business requirement.
As per the report, banks often allow their customers to access working capital loans through CCOD for their businesses’ day-to-day operations. In a few cases, the bank relationship manager asks these customers to take advantage of their unused CCOD limits at the end of a quarter. When the customer approves of the same, the bank transfers the unused limit to their current bank accounts, which increases the bank’s total deposit figures for that relevant quarter.
These types of deposits are usually taken back by the bank within two or three days after the quarter ends. Even though customers can be charged a nominal interest for using the CCOD limit, these banks provide incentives that make sure the customer does not face any financial load.
An expert explains that such customers depend on their relationship with the bank, and therefore, they feel pressured and cannot deny such favors.
The banking industry has been using such practices to increase the deposit figures for a long time. The temporary deposits at the end of the quarter can artificially improve the liquidity ratios, the net interest income and the loan-to-deposit ratios, which can make the balance sheet appear stronger to the investors. This grabs the attention of more investments in a highly competitive market.
The practice may seem to be beneficial for the bank, but only in the short term. It misrepresents the bank’s actual financial position. Using this trend regularly can attract regulatory investigation, which could degrade the bank’s image in the market and even result in penalties.
As per the report, HDFC Bank stated in the internal email that it does not perform such practices. The bank directed supervisors to advise staff against engaging in these transactions and has warned that appropriate action will be taken if the members fail to comply.
According to a spokesperson from HDFC Bank, actions have already been taken against the employees engaged in such activity. Another spokesperson highlighted that the bank has started educating the employees across branches to ensure they follow the banking ethics and the regulatory rules.
In another case from March, a huge fraud was reported at HDFC Bank’s Betul branch in Madhya Pradesh. Patrika reported that employees there faked documents to steal money from customer accounts, possibly to fund betting on IPL matches.
Over six account holders have forged complaints claiming that the bank employees took out funds by making fake credit cards, unauthorized fixed deposits, misusing self-cheques, and conducting fraudulent online transfers. However, these are just accusations, and the authorities have not confirmed this officially.
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
