RTI Activist » Blog Archive » Beware ! How HSBC Bank Systematically Loots NRIs & High Net-worth Individuals
Home » National News, RTI Activist

Beware ! How HSBC Bank Systematically Loots NRIs & High Net-worth Individuals

2 May 2012 No Comment

RTI Activist & Jt.Editor of RTI Activists News Krishnaraj Rao Sheds light on How HSBC Bank Systematically Loots NRIs & High Net-worth Individuals

1 May, 2012, Mumbai: Calling corporate honchos, high net-worth individuals and Non Resident Indians – who are too busy, too important, too aged or too distracted to keep track of their lakhs and crores of rupees in corporate earnings and life-saving, and therefore entrust this job to HSBC Bank’s portfolio management, wealth management and asset management services. Have you signed blank forms and letters giving HSBC Bank blanket permissions to trade on your behalf, pay insurance premiums, housing mortgages, bills etc? Has your friendly neighborhood HSBC Bank, through its relationship manager, convinced you that the best way to grow your wealth is by giving it the absolute discretionary power to buy, sell and hold instruments such as ULIPs and SIPs on your behalf? Does your relationship manager give you figures and vague reassurances over the phone, but avoid putting them in writing?

If you answered yes to these questions, then maybe you should panic. Call your chartered accountant immediately and get him to study whether your funds have grown or remained steady over the past few years… or whether they have greatly diminished.

The chances are, your mega-bucks are being bled away as bank commissions, charges and interest payments. Two case studies show how HSBC Bank makes its super-rich customers poorer within a few years, and frustrates their efforts to exercise control over their own wealth. In FY 2009-10, there were 58,851 customer complaints against HSBC India. Numerous complaints are on the internet.

Like former Nasdaq chairman Bernard Madoff who was jailed for defrauding billionaires, Hongkong and Shanghai Banking Corporation Limited is a financial slaughterhouse that attracts A-listers and cuts the meat off their bones. To gain absolute control over their millions, it gets them to give them multiple copies of signed but blank and undated forms which it then hoards for future use. Examples of such forms: http://tinyurl.com/HSBCBank-forms

Smooth-talking relationship managers coax and bully high net-worth individuals (HNWIs) and NRIs to sign blank forms, blanket disclaimers and waivers. This gives HSBC Bank’s various branches uncontrolled access to their huge financial assets, all in the name of protecting and maximizing the value of the assets. Using its multiple divisions abroad and in India, HSBC Bank methodically subjects the Non Resident Indian (NRI) customers to unreasonable demands for funds, signatures etc.

For those who don’t comply with HSBC’s demands, the consequences are messy, embarrassing and loss-making – unpaid EMIs, big penalties, the bank’s collection agents harrying the NRI’s family members in India. The account status of defiant HSBC clients is downgraded from “privileged”, and suddenly, minimum balance requirements click into position, and big penalties start getting deducted from the account despite more-than-adequate balance being held in other accounts, and despite the bank having full authorization to move money between their various accounts!

Even after they become aware of all the cheating that is happening, the customers of HSBC bank are cowed down for fear of damaging their credit history, and because they have unwittingly given the bank access to all the financial areas of their lives! Aged and ailing people, or people going through a professional/personal crisis simply have no energy to take up this fight. So they file complaints to the bank’s higher ups, vague assurances are offered in exchange for signatures for waivers and disclaimers, months turn into years, more of your wealth goes into HSBC bank’s salaries and commissions, and the bank’s stranglehold grows stronger.

NRIs are especially vulnerable because of (a) the practical difficulties posed by time zones, market timings and office timings (b) different banking regulatory regimes and banking practices in USA, UK, Europe and India. What appears to be happening is a deliberate and malafide abuse of these differences.




A. THE DETAILED ACCOUNT OF LONDON-BASED NRI PROFESSIONAL “SUSHMIT MALPE” (name changed to preserve privacy) stretches from 2005 till date. This NRI’s story has several layers:

(1)    PURCHASE OF SIP BY HSBC NRI SERVICES, UK: http://tinyurl.com/HSBCBank-SIPS-MutualFunds

Highlights (direct quotes):

  • 12th Dec 2005 – At the onset the RM and Branch head says that I have to cultivate a fiduciary relationship with RM and trust them. He assures me that HSBC as the largest bank will adhere to Reserve Bank of India guidelines and is independently audited… He ask me to “sign only on the last page … where it says signature” and also asked to “sign a few copies of Letters of Instructions, SIP (systematic investment plan), Redemptions and SWP (systematic withdrawal plan)”.  Basis of this the funds were transferred for investing and SIPS put in place. GBP 1,500 / month to be invested in SIPS.  HSBC said that this is usual with NRI customers as Indian market is volatile and if the market drops the RM can use the blank forms to stop losses. 31st Dec 2008 the portfolio size is Rs 78 lakhs – by 1st Jan 2010 the portfolio is down to Rs 31 lakhs. HSBC has demanded and held blank forms. The bank was supposed to regularly monitor the portfolio, and use these forms for stopping the losses. Not a single MF was sold. Losses of about Rs 47 lakhs.
  • Dec 2006 – Rs 2,00,000 missing – closing balance of Dec 2006 is Rs 7,00,585 in NRO account. In the statement of Jan 2007 opening balance on 17th Jan 2007 shows balance Rs 5,02,012. Money is missing.
  • 23rd May 2011 – Branch head finally admits to holding blank forms and says that RMs are discouraged from holding blank forms. However, when asked if the Portfolio was managed in accordance with RBI / SEBI norms, the bank refuses to provide such a confirmation in writing.




Highlights (direct quotes): Feb 2007 when my portfolio was circa Rs 43 lakhs (with Rs 22 lakhs in cash) I visited India and met up with my relationship Manager. At that point of time I had suffered a health scare which turned out to be benign and had spoken about it to my RM. Clement Philip (Branch Head) and Anubha Bhattacharya (my RM) impressed upon me that if I died my parents, wife and children would all be left without any money. They marketed to me ULIP where they explained that it was best of both worlds which gave me insurance cover and the money grew as it was invested in Mutual Funds… But, as of 20th Oct 2011, no policy or insurance cover from 21st March 2007 to 20th Oct 2011. Sum removed from account – Rs 22 lakhs. Sum returned into the Account Rs 6 lakhs.


(3)    HSBC PERSONAL BANKING SERVICES — Mismanagement and Account Transfer Fraud between HSBC UK & HSBC India: http://tinyurl.com/HSBCBank-Fund-Management

Highlights (direct quotes):

  • May 2009 – there are is over Rs 49 lakhs in the bank account. Siddhartha call and tells me that there is “insufficient funds” for home loan and asks me to transfer GBP 4000. He later confirms this in writing on 22nd June 2009. In the past HSBC has not acted on instructions and has converted GBP to INR (despite instruction to the contrary).
  • 10th July 2009: I wrote to Nilanjana: “The bank has still not been able to establish the reason for the faulty transfer. HSBC India thinks that this was a fault with HSBC UK and as I have understood that HSBC UK thinks the other way around. Siddhartha Das had asked me to transfer funds to make the payment which I had on the 22nd. From my earlier conversations with you I have understood that this was wholly unnecessary as my account already had funds in it and this transfer was not necessary… you were able to debit Rs 44k (circa) from the account without having to use the £4000 I had transferred. In the mean time you home loan department in India are still continuing to harass my brother.
  • Sep 2009 – HSBC sends collection agents home to harass my elderly parents when they are alone at home. Agents inform the watchman at the building that they have been sent by HSBC and are here to deliver documents to my parents… Come upstairs and threaten and abuse my parents when they are alone at home. Father protests and finally when he picks up the phone to call Jadavpur PS the collection agents leave the premises. When father goes to HSBC Shakespeare Sarani and protests to Sandeep Mishra (VP for Mortgages) who justifies the collection agents actions. He says father is a co-applicant in the loan and hence is responsible for non payment.  It is relevant to note that Sep 2009 there is over Rs 60 lakhs worth of shares and blank LOIs with RM. Despite repeated follow up RM has not been in touch with HSBC’s Home Loan department; and we are clear from the outset that I am taking the loan and servicing it. Did not want parents to be part of the loan. HSBC from the outset has said that flats should be held jointly in case something happens to me. Once the flat is booked in joint names the Bank insists that father, brother and Mother to be made joint applicants. Father did not want to be co-applicant.  This is the manner in which HSBC traps the family of NRI such that pressure can be put on them.

 (4)    HSBC MORTGAGE LOAN INDIAMismanagement, Delays & Lies: http://tinyurl.com/HSBCBank-Mortgage-Loan

Highlights (direct quotes):

  • March 2007 – RM and HSBC team has inspired my confidence by (a) giving me regular visibility; (b) growing the money – the bank account has Rs 60 lakhs. Came down to Kolkata and meet with the Premiere team of Clement Philip (VP), Sachin Nigam (VP), Anirudha Agarwal (Eastern Head for Mortgages), Anubha Bhattacharya (my RM). The plan was to sell the shares and use the money for buying real estate.  At the meeting I was told by the HSBC team that it does not make sense selling shares to buy real estate. I was advised to grow my wealth by staying invested and use mortgage to buy property. At the meeting I let the team know that I am averse to the idea of borrowed money. Sachin tells me that the mortgage rates of 10.25% are at an all-time high “Indian economy will calibrate to global economy” and that the rates are bound to come down. Advised to invest in a project which is still undergoing construction such that at the outset the repayment would be very low and the property can appreciate in price.  In the meeting Clement and Sachin tell me not to worry as it is HSBC’s job as experts to grow my money such that they will be able to pay off the mortgage. Agree to the plan and stick to it.
  • 19th June 2007 – Calcutta Riverside allots flats. Oct 2007 – first complaint from the Builder that despite reminders to the Mortgage team money was not released.  When I write to the HSBC Mortgage Team and my RM, there is a “ping-pong” between the two. Despite both being a part of the same bank and the HSBC promise that RM shall be the single point of contact RM puts the blame on Mortgage Team, Mortgage Team puts the blame on the RM for the delay. End result is delay in paying the builder and fine is imposed.  13th Oct 2007 – Anirudh (Eastern Head of Mortgage for HSBC) –  as a retaliation to my complaints responds by saying that (even though HSBC introduced the Calcutta Riverside Project to me for investment) it has not been approved by HSBC. When this question is asked to Anirudh, he retracts and admits that the project has been approved by HSBC as a Category A Builder, but the reason why they cannot action the loan is because Credit Sanction has lapsed the day before. HSBC relies on its own inaction and ineptitude to let the Credit sanction lapse.
  • 29th April 2011 – HSBC has in the past been getting blank LOIs and other documents signed and have kept them with themselves. They have in the past removed money from my NRE / NRO account without any intimation. To cover their back just before a payment is to be made to a builder they “have mysteriously come up with a new letter (disclaimer), which has been slipped in without any explanation or prior intimation”. This letter is a gun to my head as HSBC makes it clear that they are not willing to make any disbursements and they will not process the payment to the builder. The disclaimer states: “…I am well aware that I need to pay EMI / Interest every month and should fund my account accordingly…. I am well aware that HSBC A/c No. 025-389164 – 009 should be well funded for the payment of interest every month …And that I have issued Standing Instructions for the same…. Please note that I am a NRI currently based at London, UK. There is a documentation delay.” I am unable to understand why such a disclaimer is being taken from me.
  • It is only a year later when travel to Kolkata to get my accounts and documents from HSBC that I discover that HSBC has been removing money from my account without any authorization and hence have sent the disclaimer to protect themselves in the future. At that point of time I have no option as the bank is holding me hostage and won’t release the payments without the disclaimer. I make some changes and send them the disclaimer document – putting on record that I am very concerned about this practice and that I have no options.
  • 23rd May 2011 – Jeetendra Mohta (HSBC Mortgage) puts pressure to sign and send the waiver letter. He writes directly to the Builder stating that “Despite repeated reminders there is no revert from customer”, thereby putting the blame on the customer for not signing and sending the disclaimer letter.


B. THE SUCHITRA KRISHNAMOORTHY STORY: http://tinyurl.com/Suchitra-Krishnamoorthy-HSBC

  • In September 2006, Suchitra Krishnamoorthy entrusted Rs 3.6 crore to HSBC Bank for investment. HSBC Bank caused her losses of over Rs 79 lakhs before December 2011, when she finally withdrew the power of attorney and authority. The legal notice issued by her points out, “HSBC charges a 2% entry load for every purchase made by it on behalf of our client. To inflate this entry load, HSBC sold investments made in mutual funds at unwarranted very short spans of time, sometimes within just a few weeks. These rapid sales or purchases were without any cogent basis, warrant or justifications. In this manner, HSBC was able to overinflate the 2% charge to an aggregate amount of Rs 29,34,450. These excessive sales and purchases of investments was not done in our client’s interest, and in fact was against our client’s interest. Mutual funds were sold when the market index was low, and purchased when it was high.
  • “In or about 2007, our client needed money for investment in a personal home. Our client wanted to withdraw money from her investments for this. However the HSBC officials deliberately mislead and misguided our client that she should take a home loan from HSBC Bank. Accordingly, our client was misguided into taking a loan of Rs 1.69 crore from the Bank. Our client had to pay a monthly EMI of Rs 1.89 lakhs… our client was never informed by the Bank that she was entitled to a smart loan from the Bank for her home. By such smart loan, our client’s interest burden would have been greatly reduced if not nullified. When our client learnt of this smart loan facility from a third party, she immediately requested the Bank for this facility, but to avoid giving her this facility, the bank delayed on one pretext or another… Finally, our client sold a property she held in Karjat to repay the loan in 2011. By this time, our client had paid the bank about Rs 58 lakhs towards interest on this loan, and Rs 1.65 crores towards the principal amount…” the legal notice says.

C. THERE ARE SCORES OF COMPLAINTS AGAINST HSBC IN THE PUBLIC DOMAIN. Busy professionals and wealthy people need someone to rely on, and HSBC Bank’s relationship managers are specialized in getting the customer to confide in them, and then handing them over to the bank’s various divisions for systematic exploitation.

(1)    Browse these Google search results: http://tinyurl.com/HSBC-cheating-google

(2)    And this blog: http://tinyurl.com/Police-Complaints-HSBC-India


HSBC customers, please document the exact methods that “The World’s Local Bank” uses for doing doing the dirty on you. We will need to build pressure on Reserve Bank of India, Economic Offences Wing (EOW) and other authorities to sit up and take notice.

If you wish to share your story in the public domain without disclosing your name and personal details, please get in touch.

Comments are closed.