HDB Financial Services — Personal loan against insurance policy

Address:	Gurgaon, Haryana, 201308
Website:	www.hdbfs.com

This complaint is against hdb financial services, which is indulged in malpractices and fraudulent methods by promising personal loans at extremely low interest rate, by making customers buy insurance policies. Please refer to the series of events below:
I received a call from rohit (+91 [protected]) on 20/06/2017 who said he is calling from hdb gurgaon and offered me a personal loan at 3% interest basis a car that i had purchased in 2014. Considering the normal prevailing rate of approximately 11%, this sounded too good to be true, so i asked him how is that possible. I told him that i am interested in a loan of 12 lacs but he would need to explain me their model because lending at 3% per annum was impossible considering a minimum of 4% returns on savings account provided by any bank. He told me that this was possible because to get the loan at 3%, i will have to buy an insurance from one of the companies hdb has tie up with and hdb will reap all the benefits of the insurance which will be approximate 7.5%, plus the 3% that they will charge from me for the loan, which will equate to a total of 10.5% return on lending. I, myself am from the banking domain so this entire story did not sound very convincing to me. I asked rohit to make me speak to some senior officer in hdb who can explain things better, to which he consented.

The next day (21st jun. 2017) i received a call from ritu kapoor (+91 [protected]) who introduced herself as the finance manager in hdb based out of chandigarh branch. She said that she is employed with hdb since past 7 years and manages personal loans for chandigarh and delhi/ncr. She said that my profile was one of the selected one basis a car that i had purchased in 2014 which made me eligible for the offer from hdb basis the excellent credit history that i had. I asked her to explain the process of lending at 3% interest, for which she mentioned the following:
1. I would have to issue a cheque worth 5% of the loan amount, for the buying the insurance from one of their either partners - future generali or hdfc life insurance and provide then with other documents like my itr, bank statements, photographs, cancelled cheque etc.in this case since i was interested in 12 lacs, my amount on the cheque would be inr 60, 000.

2. The insurance company then will issue me a policy for the same tenure as the loan term is. Using that policy number, hdb finance will issue me a personal loan at 3% flat interest rate, which equates to around 5.8% reducing interest. This was still far better than the lowest interest rate that is available in india for any product, for instance home loan at 8.15%.

3. The disclaimers that were mentioned by ritu are:
A) hdb will be able to process the loan only after the insurance policy is issued.
B) hdb finance will reimburse inr 60, 000 initially taken from me for the insurance policy while disbursing the loan. So hdb will disburse inr 12, 60, 000 instead of 12 lacs but i will be charged interest only on 12 lacs.
C) i will have to sign a document which will clearly state that hdb has returned the amount taken from me for the policy and in no circumstances shall i be able to claim any benefit of the policy, like maturity, debt etc.in short, hdb finance is liable to maintain that insurance in my name and hence is authorized to get all benefits from it.

All the above sounded very nice to me since i had nothing to do with the insurance and i was getting a loan of 12 lacs for a period of 10 years at just 3.6% which meant i would pay only 3.6 lacs of interest to hdb over a period of 10 years. This was almost half of what the lending rates currently are. Additionally i was also told that if i go for future generali, then i would have to pay inr 50, 000 which meant risking 10k less.

I was supposed to provide all documents along with the cheque of inr 50, 000 on 23rd jun, 2017 when the following series of events alarmed me:
1. I got a call from future generali explaining about the 'assured money back' policy. All through hdb finance told me that they have a tie up with the insurance company but the conversation with the insurance agent made me feel otherwise.
2. Post the above, i got a call from ritu kapoor (Hdb) saying that i will be getting a verification call from fgi (Future generali) which will be on a recorded line to confirm if i have been promised anything in lieu of the policy like gold coin, assured return in 15 days or any personal loan etc. To which i have to say a no. Now this sounded fishy to me so i asked her why should i not mention about the loan. To which ritu said that the tie of hdb and fgi has been done at the head office level, so the branch people would not know about it and if i mention that, there will be a deduction of 6% to 10% from my loan amount as 'agent fees'.

Now there is no such thing in the world as 'agent fees' for any loan which gets deducted from the loan amount. Any processing fee for loan is charged separately and the payment is always taken in the form of a cheque in favor of the financial institution which is lending the money. Plus if there is a tie up with the insurance company then why would you have to lie to them that a loan has been promised to you because of which you are buying this insurance policy. According to hdb they have been claiming that it is a legitimate product, so why would anyone have to hide it. If it is such a nice product then why should't more customers with excellent credit profile be apprised of it, when both the customer and the financial institute is benefiting from it.

Amongst all this, i landed to several customer complaint forums where in financial institutes have duped people by making them buy insurance policies with the promise of personal loans at extremely low or no interest rates.in the end the customers are just left with a policy which they did not need in the first place, for which they would have ended up paying a heavy first year installment (In my case it was 50k), which they wouldn't be interested in keeping or be able to carry on.

I had understood the catch here so i asked ritu to send across all the clauses of the deal from her official email id, which would contain her signature. She got extremely uncomfortable when i asked for it and said that she is not authorized to disclose about the loan until i buy the insurance policy, which made the entire story very clear. I denied giving her any documents until i get the email and started cross questioning her when she hung up on me and never responded to any subsequent calls. The same happened when i tried questioning rohit (The afore-mentioned agent from hdb). Essentially if i would have paid up for the policy, fgi would have actually issued me a insurance policy but hdb finance would never have anything to do with it and the loan promises were actually fake since they never had any tie up with them else they should have been comfortable in sending me the details from their official email. And after that if i would have challenged fgi, then they would have said that they had asked me on a recorded line if i was promised anything in lieu of the policy to which i would have had already said a no, as per ritu kapoor's advice, so even cancelling the insurance policy would have been a total hassle for me.

These are the kind of smart malpractices which financial institutions are following these days. I thought it was my duty to post about this incident in as much detail as possible so that reading it, people can identify early warning signals. Anything which sounds super lucrative is in all likelihood associated with such fraudulent intentions. Do ensure to 'google' the symptoms and you will surely land up on pages where victims/potential ones might have shared their experience.

I urge the authorities to look into these incidents and kindly take necessary actions against such people and institutions to restore the faith of customers.

Regards,
Subroto