**HDFC Bank Takes Action Against Non-Compliance in Deposit Practices**
HDFC Bank has issued a warning regarding necessary staff actions in response to identified non-compliance related to deposit practices. The bank’s decision comes after observing certain transactions occurring at the end of reporting quarters, prompting disciplinary measures and employee sensitization efforts.
As India’s largest private sector lender, HDFC Bank is intensifying its scrutiny of the practice where temporary deposits are created at quarter-end to artificially inflate deposit figures. The bank has communicated its stance through multiple emails to employees, the most recent being sent in late March, emphasizing that such practices will not be tolerated.
The March email highlighted the issue of creating deposits through the bank’s own loan facilities, specifically noting the temporary creation of Current Account and Savings Account (CASA) and Term Deposits (TD) using Cash Credit and Overdraft (CCOD) facilities without legitimate business rationale. Cash credit is a short-term loan provided to businesses for working capital, while overdraft facilities offer credit to individuals and companies.
HDFC Bank’s communication stressed that these activities are discouraged and that supervisors should guide staff against pursuing such transactions. The email also warned of potential disciplinary actions for any identified non-compliance.
Industry insiders revealed that this practice is not uncommon, with relationship managers sometimes encouraging business customers to utilize their CCOD limits on the last day of a quarter. This results in a temporary increase in deposits, which are typically reversed shortly after, often within one or two days. While customers incur a small interest charge for using the CCOD limit, branches often attempt to mitigate the financial impact.
A spokesperson for HDFC Bank confirmed the institution’s commitment to maintaining integrity in its operations and ensuring compliance with regulatory standards.
**FAQ**
**What actions is HDFC Bank taking against non-compliance?**
HDFC Bank is implementing disciplinary measures and educating employees to prevent the manipulation of deposit figures through temporary transactions at quarter-end.
