Open Letter to HDFC Bank CEO Triggers Controversy
In late 2024, a letter penned by Lilavati Trust to the HDFC Bank CEO surfaced online, accusing the bank of employing heavy-handed tactics in recovering a loan taken by the trust. The letter, made public in January 2025, has since become the focal point of a heated debate spanning legal, ethical, and humanitarian dimensions.
1. Background of the Loan Dispute
Lilavati Trust, a charitable organization supporting underprivileged communities, obtained a ₹50 crore loan from HDFC Bank in 2020 to expand its healthcare initiatives. While initial repayments were timely, the trust fell behind after unforeseen revenue shortfalls in 2023.
2. Key Allegations in the Letter
Aggressive Recovery Measures: The letter details instances where bank-appointed agents allegedly threatened Trust staff and sequestered vital medical equipment.
Breach of Moratorium Terms: Lilavati Trust claims HDFC Bank reneged on an agreed repayment moratorium after Covid-19 disruptions.
Humanitarian Impact: The Trust warns that asset seizures risk shutting down clinics serving tens of thousands of patients.
3. Legal Response from HDFC Bank
HDFC Bank has refuted the Trust’s allegations, stating all recovery actions were in strict compliance with RBI guidelines and sanction terms. The bank has filed a ₹100 crore defamation suit against Lilavati Trust’s board members.
4. Humanitarian Concerns
Several NGOs and public figures have weighed in, urging the bank to adopt a more compassionate stance. Health sector experts argue that halting critical services could reverse progress in maternal and child healthcare in rural Maharashtra.
5. Industry & Regulatory Implications
Banking Code of Conduct: The dispute has prompted calls for clearer RBI regulations on loan recovery practices against non-profit borrowers.
Corporate Social Responsibility (CSR): Observers note that aggressive recovery could tarnish the bank’s CSR image.
FAQs
Q1: What prompted Lilavati Trust to write to the HDFC Bank CEO?
A delayed repayment schedule and alleged breach of a Covid-19 moratorium led the Trust to raise concerns about harsh recovery methods.
Q2: Has HDFC Bank officially responded?
Yes. The bank denies wrongdoing, asserts compliance with all guidelines, and has initiated defamation proceedings.
Q3: Could this affect HDFC Bank’s reputation?
Potentially. Public criticism and NGO pressure may impact the bank’s CSR ratings and customer sentiment.
Q4: What are the legal next steps?
Both parties are in talks for an out-of-court settlement, while parallel litigation continues in the Bombay High Court.
Q5: How might regulators react?
The RBI may revisit recovery norms for non-profits, and parliamentary committees could call hearings on ethical lending practices.
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