In his first communication to shareholders, he also promised action to ensure that the bank keeps culture, conscience and customers at the forefront in light of regulatory action on misselling.
“We are certainly sorry for what has happened. And have taken this as an opportunity to improve and redouble our efforts to fix this problem for good,” Jagdishan said. He said that the RBI had ordered a third-party audit of the bank’s IT systems. “This audit is now over and the report has been submitted to the regulator. We now await the decision from the RBI,” he said in his letter addressed to shareholders in the bank’s annual report.
Jagdishan also acknowledged that the bank had been penalised for the arrangement that it had with a vendor for distributing GPS devices with auto loans. “Subsequently, we have been asked to pay a penalty of Rs 10 crore and have also been instructed to repay the commission that we earned from this process back to customers. We accept this verdict and will comply with the directives,” he said.
“In November 2019, a whistleblower alleged that the vendor was incentivising some of the employees in the auto loan team to bundle these products (GPS) with our car loans. We immediately conducted an enquiry and basis the findings have taken necessary actions against the involved employees including termination of their services and also terminated the arrangement with the vendor,” said Jagdishan.