HDFC Bank: Pawn your wife's gold now -- No documents needed!
October, 2016: Imagine you are having a gynaec examination. With his rubber-gloved fingers inside you, the gynaec starts a casual chat about why you should buy his home-grown brand of condoms and intimate products. Creepy? Yeah, well, but that's how HDFC Bank and other private-sector banks work. Actually, HDFC Bank is like if your gynaec collects real-time information about when and with whom you have sex, what kind of sex you are habituated to, exactly when you menstruate, what kind of lingerie and sanitary pads you are currently wearing, etc. and then this gynaec goes and hires a bunch of MBAs and college freshers, calls them "Relationship Managers", lets them hang around his clinic pretending to be gynaecologists themselves till you start feeling comfortable enough to tell them about your intimate problems.
Then your gynaec goes and gives these relationship managers access to your information on their computer screens, with monthly targets for selling you condoms, sanitary pads and other intimate products. They call you and make you feel important by calling you a preferred customer, and giving you a platinum card. So, if your periods are four weeks late, you get a call that goes like: "Good morning, ma'am, I am Nikhil, your personal banker. May I interest you in visiting our abortion clinic? Oh, you don't want to abort? My apologies, madam. May I take this opportunity to gift you an early booking in a maternity home with whom we have a tie-up? We also have a tie-up with Amazon for incredible discounts on maternity gowns and chocolate-flavoured condoms this Diwali. When can I come and meet you to book your orders?"
Bankers are routinely privy to salary details, annual income, etc. that it is their business to know. However, the salesmen and women who hang around your bank have no business to know your financial details. HDFC Bank branches have a bunch of glib young men and women who are very approachable and go out of their way to fill up account-opening forms, etc. for you. Just because they sit inside the bank, you think they are "bankers" and you never hesitate to ask them to access your account on their computers. So these sales people get to know private things such as a huge cash-flow into your accounts when your life insurance policy matures, or you take VRS, or sell your house, or book profits in the share market.
If you are flush with funds, your "personal banker" says, "Sir, can I interest you in our tax planning products to reduce your income-tax and capital-gains tax liability?" Alternatively, if you are struggling to pay credit-card bills, frequently overdrawing your current-account, breaking fixed deposits prematurely, etc., your relationship manager nudges you to take a personal loan or gold loan which he knows you are unlikely to repay in time. Loan disbursal lets him meet his monthly targets and earn commissions, and when you default on repayments, heavy penalties and foreclosure of your gold loan helps the bank reap handsome profits. Predatory lenders used to be called loan sharks and pawn-brokers! How the times have changed!
|Customers are set up for systematic long-term exploitation by HDFC's bankers and non-bankers acting in concert.|
Here's a real-life anecdote: An elderly couple walked into an SBI Bank branch to fill up their 15H form, so that TDS would not be deducted on their interest income. A friendly-looking lady sat them down at her desk, filled up their forms for them, and persuaded them to invest Rs 3 lakhs in SBI Mutual within 15 minutes. The only reason that the elderly folks trusted this woman is that they thought she was a full-time bank staffer, whereas she was actually a freelance sales agent! .
Another anecdote: ICICI Bank organized free Aadhar Card camps in the foyers of a residential building in a posh Borivali neighbourhood. While one solitary minion sat in in the foyer taking fingerprints, mugshots, etc., half-a-dozen bank officials hung around persuading the waiting people to open accounts with ICICI Bank, and visited their homes on various pretexts. And they were pushy – it was very difficult to say no to them! Why are banks so keen on opening lots of accounts? Because it "provides customer base for ongoing cross-sell through branches". In other words, every account holder is a potential customer for credit cards, loans, etc.
|Emails giving you updates about your HDFC account balance are ethically OK... but these are the narrow end of the wedge.|
|Emails selling you the bank's debit card services seem ethically OK, but only because banking and debit/credit card businesses are so inextricably mixed up.|
|Emails like this one really cross the line from banking to advertising and marketing. Using its own customer base for marketing the products of other unrelated companies, is abuse of the trust that customers repose in bankers.|
|The box on top right shows that third-party product sales is a source of fees and commissions for HDFC Bank. The bullet points at the bottom shows that Fees and Commission form about a quarter of other Income (non-fund revenues) of the bank.|
Bottomline: In their mad race for year-on-year growth, retail bankers are crossing over some boundaries of the client-banker relationship. HDFC Bank is abundant in examples of this unwholesome trend.
These may not necessarily be adequate grounds for filing complaints to RBI or the banking ombudsman, or for going to consumer court. But this distasteful behaviour shows a tendency to exploit the customers' ignorance, dependency and blind trust in their banks.
Mumbai, 30th August, 2016: To recover its Rs 100 crore project loan to RNA Exotica before it becomes a bad debt like BOI's loan and SBI's loan, Axis Bank is pressing the panic-button and threatening flat-buyers to immediately pre-pay large amounts (like Rs 25-50 lakh), forgetting about slab-completion schedules. Axis Bank has recently written strangely worded letters to RNA's Skyline Construction Co in respect of each and every flat (see specimen), saying that unless the entire remaining amount of the flat's consideration is remitted to its designated account, RNA Corp will not be allowed to sell the said flat to the name of the buyer. These letters, which are supposedly "No Objection Certificates" for the sale of flats to the purchasers, are being lovingly forwarded by RNA Corp to the individual flat-buyers with a tiny email (see example). Axis Bank's relayed letter is like holding a gun to the heads of helpless flat-buyers and saying: "Pay everything right now! Or else you will never get your flat!" And RNA Corp's forwarding email seems to suggest, "Yes, forget about installment payments based on slab-completion schedule. Just pay 100% right now".
In fact, Axis Bank's letter has come as a jolt to many buyers who were unaware that their flat was mortgaged by RNA to Axis Bank! Hundreds of RNA Exotica's buyers are suffering from sleepless nights, trying to figure out what course of action will be in their long-term interest. "Should we just pay the remaining amount to Axis Bank, so that it will release the lien over our flats? Or should we continue to pay in installments according to slab completion stages? Or should we go to Consumer Court? Or Civil Court? Or High Court? Or what?!!!" They are at a loss as to what to do next!
[NOTE: In our earlier article titled How RNA Corp taught ExoticArithmentic to Axis Bank, we revealed how Skyline Construction Co mortgaged unsold flats of RNA Exotica in 2011 and 2013 based on hugely inflated and completely unverifiable figures. Axis Bank gave the builder a Rs 75 cr line of credit in March 2011, and beefed it up to Rs 100 crore in March 2013, although the value of the collateral fell sharply.
Also, in RNA Exotica: Nine ways buyers got screwed, we analyzed the negative implications of the sale-purchase agreement.]
Now let us analyze the letter written by Axis Bank, supposedly addressed to Skyline Construction Co., but actually addressed to the flat-buyer directly. The subject line says, "No Objection for Release of Charge for Sale of Flat no. XXX in Building no. B Wing of RNA Exotica in favour of Mr YYY." The letter goes on to say:
No, this is not really a "No Objection" letter; it is actually an Objection letter from Axis Bank to the flat-buyer with whom it really has no direct connection, and as such, it is illegal. As Axis Bank has given a project loan to the builder and not a home-loan to the buyer, it has no business communicating with the home-buyers.
IMPLICATIONS OF AXIS BANKS'S LETTER:
What is the solution to all this? One possible solution could be that flat buyers should pay this amount to Axis Bank, but only after filing a civil case and after RNA Corp gives an undertaking to the court that they will complete the project within a deadline. Groups of flat-buyers are reportedly planning to take some such step, although these discussions are still at a preliminary stage.
Aagey dekhiye, iss dhaaravahik ki Ugly kadee!
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WITH MAJOR INPUTS FROM
Mumbai, 30 June 2016: Hundreds of savvy and well-educated flat buyers have purchased "luxurious" flats in RNA Exotica without noticing what their sale-purchase agreements clearly says: that RNA Exotica is actually a large and shabby slum rehabilitation scheme with a tiny island of rich flat-buyers. The rich people's housing project is married and tied to the rehab component in the same undivided compound -- a marriage made in hell! Not just RNA Exotica's sale-purchase agreement, but also project layouts and plans presented to MOEF, give a birds-eye-view of this nightmarish neighbourhood. With clever advertizing, a tight-lipped sales staff, and several clauses in the sale-purchase agreements that forbid investors from asking the right questions, RNA Corp has been consistently misleading its investors for many years. A prospective home-buyer never gets to read the true facts before he is inside the builder's trap!
So let us take a close look at all the ugly truths that the sale-purchase agreement reveals. As a specimen, take the sale-purchase agreement of actor Arif Zakaria (Flat no. 1903, D-Wing).
NINE WAYS THE BUILDER SCREWED YOU:
RNA Exotica is a Apartment and Slum Rehab Project in a single compound, so you can't object to general public and outsiders in your compound. The agreement makes sure that flat-buyers will have no right in future to object to the rehab building and car park constructed adjoining RNA Exotica, in the same compound. This clause tells flat-buyers in no uncertain terms that the public parking being constructed on the rehab building is not available for their cars. Read this on page 13 and this on page 21 of the registered agreement. So, the proud flat purchasers should know from this clause that their building compound is only semi-private, unlike most of the apartment compounds that are completely private.
RNA Corp can construct anything on top of your flats, so keep quiet and mind your business. The agreement gives the builder the unlimited right to build anything on top of the "top floor" flat, and the flat-purchaser must keep mum about it. In other words, the builder can continue to commercially exploit any increase in FSI or any changes in rules, even if it causes great delay, inconvenience and losses to the flat-buyers, and the only thing that they can do is smile and feel privileged about owning a luxury flat in RNA Exotica.
RNA Corp can construct servants' toilets, septic tanks, electric sub-stations, closed garages, etc. etc. anywhere in the compound or in the building, so shut your nose, mouth and ears.The ground plans or floor plans shown in the agreement can and will be extensively changed to suit the builder's requirements, and this is plainly stated in the agreement itself. All kind of noisy, smelly or intrusive structures can and will be constructed in various parts of the building and compound where you live, including the same floor where you live, but you cannot object on any grounds because you have signed on an agreement that ties your hands. Your rights as a flat-buyer are restricted to the premises that you have purchased, and not, as is the case in other building projects, the common amenities.
RNA Corp can and will create third-party rights and entitlements to various parts of your building and compound, including clubhouse and various parts that you may mistakenly consider as your common amenities. Read this point carefully again, and you will see that this clause is not just a routinely-drafted formality, but is cleverly drafted to take away all your legal rights.
RNA Corp can decrease the common areas and facilities in your building, and you waived your right to raise any objections.People book luxury apartments not just because of spacious flats, but because of spacious and well-designed common amenities and facilities. These amenities and common spaces are factored into the price of the flat as "super-built-up area". But, after paying lakhs of rupees up front to book a flat in RNA Exotica, buyers are informed by their registered agreement on page 37 that the common areas cannot be taken for granted, and they have no right to object!
You unknowingly gave a power-of-attorney to RNA Corp to sign legal waivers on your behalf before all government authorities, without even informing you. According to this clause, the developer need not consult you or even inform before making big or small changes in the plans, because he can always sign an indemnity or undertaking on your behalf to tell the government that you are OK with anything that he does!
You have surrendered your right to independently verify title and ownership of the plot of land on which RNA Exotica is built... because agreement says you have already verified it and satisfied yourself! Mr flat-buyer, when you signed on every page of the agreement in the Stamp Duty Registrar's office, you definitely were not looking for tricky clauses like this one. But here is a clause on page 17 and another on page 25 that says that you have already verified the title and satisfied yourself, and now you have agreed not to investigate any further, or raise any objections.
Possession date is deliberately left blank. Therefore, you have no way of holding RNA Corp accountable for delay of several years, although there is technically a clause for delays. Read this clause on page 37 and its continuation on page 39.
RNA Corp can allot you car parking according to their own sweep pleasure, and you cannot object. The builder may allot you a really shitty parking in the basement, podium or stilt, and the builder may sell favourably-positioned parkings to others. You have no right to object. Read this clause on page 41.
So, Mr and Mrs Flat Purchaser, it is only in theory that you bought a luxury apartment in RNA Exotica. Your luxury apartment exists only in pretty advertisements. The fact is, you just bought a 2BHK or 3BHK in a shitty slum rehab neighbourhood overlooking the railway tracks, and you signed up on a document that says that you have no right to keep the people of your neighbourhood and sundry public from accessing your compound... and you have no right to object to this entire scheme of things. The only thing you can say now is, "It was nice being screwed by you, Mr Anil Aggarwal."
Sincere thanks to Sulaiman "Superman" Bhimani (9323642081) for his continuous detective work, which enabled and motivated me to write this article.
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22nd June, 2016: When builder Anil Aggarwal's Skyline Construction Co approached Axis Bank for a project loan for RNA Exotica in 2011, the bankers forgot simple arithmetic. On two separate instances -- in 2011 and in 2013 -- Axis Bank's SME loans division gave loans of Rs 75 crore and Rs 100 crore against hugely inflated mortgages of floor space in RNA Exotica. The flat size was inflated by 500 to 700 square feet per flat, and the number of unsold flats mortgaged was inflated by a couple of hundred flats in 2013. Anil Aggarwal, like Anil Kapoor (you know, the chap who sang, "One-two-ka-four, four-two-ka-one, my name is Lakhan") sang a seductive song to Axis Bank executives, who were more than willing to be seduced.
The late Anil Aggarwal's version of one-two-ka-four sounds like this: "770 square feet flat ka 1299 and 979 sq. ft. ka 1650... My name is RNA Corp! Jadoogar Anil Agarwal said 168 sold flats in 2011, but 66 sold flats in 2013. Numbers mein kya rakha hai? Now gimme your money, sweetheart." The sweethearts at Axis Bank gave the builder a Rs 75 cr line of credit in March 2011, and beefed it up to Rs 100 crore in March 2013, even as the value of the collateral fell sharply!
RNA Exotica's Flat Sizes are on Steroids:
This raises the question whether Axis Bank has double-standards – one for people like you and me, and another for people like Anil Aggarwal. Would Axis Bank have sanctioned a loan against our flats if you and I cited Super Built Up area instead of the carpet area?
Axis Bank loan was Supersized while RNA Exotica was Downsized:
Why Financial Jugglery was done:
In 2013, Anil Aggarwal's big problem was: How to get a higher loan amount sanctioned from Axis Bank against a much smaller mortgage? The solution was: by reducing the number of sold flats, the "stock" of mortgagable unsold flats would appear higher. (So, what is the real number of sold flats? My guesstimate is: if 168 flats were already sold in March 2011, then 100 more flats in the next 24 months @ four flats per month. So, 268 sold flats were falsely declared as 66 flats. If each flat is valued at Rs 1.5 cr on average, the property mortgaged to Axis Bank was worth Rs 300 cr less than claimed!)
If the building is of only 36 floors including podium, what will happen to flats such as these where sale agreements have been registered for flats on the 40th floor etc? Will the investors be compensated by RNA Corp for not delivering of the promised flats after paying money and waiting for several years?
All this financial jugglery for downplaying the risk of RNA Exotica becoming a Stressed Asset! RNA Corp has defaulted on smaller loans from Bank of India and State Bank of India. This auction notice says that RNA Corporate Park defaulted on SBI for Rs 61.50 crore, for which mortgaged land parcels in Palghar district will be auctioned. And this letter from Bank Of India to the secretary of RNA Royal Park, Kandivali, tells a similar story of default and bank recovery proceedings.
SBI is struggling to recover an amount of Rs 61.5 cr by auctioning land plots that turned out to be under CRZ, and therefore valued at a fraction of the original projected values. Will the one-two-ka-four loan transaction of RNA Exotica and Axis Bank have a similar ending? Wait and watch.
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Links of articles related to RNA Corp. Misdeeds