Now Reading: HDFC Bank faces $100 mn complaint over West Asia fund sale
-
01
HDFC Bank faces $100 mn complaint over West Asia fund sale
A group of 70 investors, who claim to account for $12.5 million (about Rs 120 crore) of an estimated $100 million raised, has complained that HDFC Bank sold them a high-yielding financial…
A group of 70 investors, who claim to account for $12.5 million (about Rs 120 crore) of an estimated $100 million raised, has complained that HDFC Bank sold them a high-yielding financial product from Carlisle Asset Management's Luxembourg Life Fund between 2017 and 2019. The investment was pitched as a unique opportunity promising returns of 14-16%, but the fund stopped redemptions in late 2020, leaving many non-resident Indian investors unable to access their money.
One investor, retired banker Umesh Kumar Chandanani, said he invested $1.5 million through HDFC Bank's UAE branch after a relationship manager called him in 2019. An October 2018 email from an HDFC Bank executive, reviewed by Mint, described the Carlisle fund as 'very different from normal traditional equity or bond funds' and claimed annual returns averaging 21%. The bank said in a statement that it only facilitated the investments and that the fund house is responsible for performance and redemption. It added that it found no evidence of mis-selling.
HDFC Bank told investors in an August 11 letter that since November 2020, Carlisle has consistently failed to execute redemption requests. The bank said it has repeatedly liaised with Carlisle, external legal counsel, and Luxembourg's financial regulator. This is the second time in recent years that HDFC Bank has faced such customer complaints in West Asia.
Indian Opinion Analysis
Life settlement funds like Carlisle's are exotic products that buy life insurance policies at a discount and profit from the death benefit. Such funds are not regulated in India, and their returns depend on actuarial assumptions that can go wrong. The key question is whether HDFC Bank conducted adequate due diligence before selling the product to retail NRI customers. The bank's claim that it was not the sole distributor could limit its liability, but investors argue the bank's brand gave the product credibility. A similar case involving HDFC Bank and a different fund in Dubai is already before courts. Investors are now weighing legal action in UAE courts or approaching the Luxembourg regulator. The next step will be whether the bank agrees to a compensation mechanism or faces a formal complaint with the UAE central bank.
Source: livemint.com
This story was synthesised by AI from the source linked above.
