HDFC Bank faces US class action, NRI investment complaints

HDFC Bank is facing two simultaneous controversies: a US class-action lawsuit for alleged securities law violations, and complaints from 70 NRI investors over a $100-million high-yield investment product that stopped redemptions. The class-action suit, filed on 13 August in the Southern District of New York, alleges the bank disguised payments to the Maharashtra State Road Development Corporation as marketing expenses, offering an effective interest rate 2.51 percentage points above other depositors. The complaint, filed by law firm Glancy Prongay Wolke & Rotter, seeks compensatory damages for investors who bought HDFC securities between July 2023 and May 2026.

Separately, a group of 70 investors claims HDFC Bank's Dubai and Bahrain branches sold them Carlisle Asset Management's Luxembourg Life Fund between 2017 and 2019, promising 14-16% returns. Redemptions stopped in late 2020. The investors, holding $12.5 million of an estimated $100 million raised, say the bank pitched the life settlement fund as low-risk. HDFC Bank stated it merely facilitated the investments, and the fund's performance and redemption responsibility lies with Carlisle. The bank said it found no incidence of mis-sell. The US court has issued a summons, requiring HDFC Bank to respond within 21 days.