HDFC Misinformed New Loan as Top-Up

[Gurpreet_PA]

I need expert advice regarding a misrepresentation issue with my HDFC personal loan.


I had an existing personal loan of ₹3 lakh (@12% for 3 years, EMI ~10k, 1st EMI in March 2025). After 7 EMIs (September), I needed ₹50,000. My home branch called and said I was eligible for a Top-Up loan of up to ₹2.5 lakh. I clearly requested only a ₹50,000 top-up.

However, instead of giving a real top-up, the bank closed my existing loan and created a new loan of ₹3,05,000. From this, ₹2.5 lakh was used to close my old loan, and ₹52,500 was given to me, 2.5,00 deducted as processing fees — without clearly informing me this would be a full refinance, not a top-up.


Because of this:

• I lost the benefit of the first loan (7 EMIs already paid, including ~₹20,000 interest).
• My interest schedule restarted from zero.
• A new 36-month loan (@12%) was forced, with a 12-month lock-in.
• I now face a 4% foreclosure charge if I want to close this loan.

My mistake was trusting the process because it was handled by my own Home Branch employee, so I assumed the information was accurate and in my best interest. The entire process happened over phone calls, and the loan amount was disbursed first. Only after receiving and reading the loan agreement did I realize that my old loan had been closed and a completely new loan was created – something that was never explained to me beforehand.

I want to know what action I can take and what would be the best way to seek a resolution.

Thanks

 

[Yogesh Maher]

Thanks buddy for bringing this upfront. Now a days on daily basis HDFC promoting top up loan on existing loan. And I was about to proceed with ₹1 lakh top up

 

[bekifaayatifan]

Complain to RBI ombudsman.

 

[AlertsByVivek]

A. What went wrong (from a regulatory point of view)​

Based on RBI and banking norms, this is a case of misrepresentation / deficient service, not merely a misunderstanding.

Key issues:

1. Top-up vs Refinance was not disclosed
   
   • A top-up loan should retain the original loan and add an additional amount.
   • What the bank did was a full foreclosure + fresh loan, which must be clearly disclosed and consented to.
2. Material facts were not explained before disbursal
   RBI requires banks to disclose before execution:
   
   • Reset of tenure
   • Restart of interest amortization
   • Lock-in period
   • Foreclosure penalties
   • Processing fees
3. Consent after disbursal is not valid
   
   • Sending an agreement after money is credited does not cure mis-selling.
   • Consent must be informed and prior, not assumed.
4. Financial detriment occurred
   
   • Loss of interest already paid
   • Forced lock-in
   • Increased cost if foreclosed
   • Processing fee charged for something you didn’t request

This squarely fits “mis-selling and deficiency in banking service” under:

• RBI Integrated Ombudsman Scheme, 2021
• Consumer Protection Act (if escalated later)

---

B. What resolution you can reasonably ask for​

Be realistic but firm. You have strong grounds to seek one of the following remedies:

Option 1 (Best outcome – ask first)​

Reversal / correction of the loan structure

• Restore original loan as if it continued
• Convert ₹50,000 into a genuine top-up loan
• Adjust EMIs already paid
• Refund processing fee
• Remove lock-in and foreclosure penalty

This is possible internally if the bank admits fault (rare but happens).

---

Option 2 (Very achievable)​

Penalty-free foreclosure / conversion

• Waiver of:
  
  • 12-month lock-in
  • 4% foreclosure charges
• Refund of processing fee
• Written admission of miscommunication

This is the most common Ombudsman-ordered relief.

---

Option 3 (If you want to exit the loan)​

• Close the loan without foreclosure charges
• Pay only principal outstanding
• No penalty, no lock-in

---

C. Step-by-step action plan (important)​

STEP 1: Write a formal complaint to HDFC Bank (mandatory)​

Email + physical letter to:

• Grievance Redressal Officer – HDFC Bank
• CC: branch manager + customer care

Subject line:

Complaint regarding mis-selling of personal loan under the guise of “Top-Up Loan”

Include:

• Dates
• Loan numbers (old and new)
• Clear statement that you requested only ₹50,000 top-up
• That refinance, lock-in, restart of tenure were never disclosed
• That agreement was received after disbursal
• Financial loss suffered

End with a specific demand (choose one from Section B).

Bank has 30 days to resolve.

---

STEP 2: Escalate to RBI Ombudsman (very effective)​

If:

• No response in 30 days, OR
• Unsatisfactory response

File complaint at:
RBI – Integrated Ombudsman Scheme (online)

Attach:

• Loan agreements
• Disbursal statement
• Emails / call records (if any)
• Your written complaint to HDFC

Use keywords:

• mis-selling
• lack of informed consent
• deficiency in service
• unfair trade practice

RBI Ombudsman decisions are binding on banks.

---

STEP 3 (Optional but powerful): Legal notice​

If the amount involved is significant and the bank resists:

• A simple legal notice from a lawyer (₹2–5k cost)
• Often triggers immediate settlement

---

Important practical tips​

• Do not stop EMIs while dispute is ongoing (protect your credit score).
• Keep all communication in writing.
• Avoid branch visits without email follow-ups.
• Do not sign any “closure confirmation” unless penalties are waived.

​

 

[GURUWALKE]

I need expert advice regarding a misrepresentation issue with my HDFC personal loan.


I had an existing personal loan of ₹3 lakh (@12% for 3 years, EMI ~10k, 1st EMI in March 2025). After 7 EMIs (September), I needed ₹50,000. My home branch called and said I was eligible for a Top-Up loan of up to ₹2.5 lakh. I clearly requested only a ₹50,000 top-up.

However, instead of giving a real top-up, the bank closed my existing loan and created a new loan of ₹3,05,000. From this, ₹2.5 lakh was used to close my old loan, and ₹52,500 was given to me, 2.5,00 deducted as processing fees — without clearly informing me this would be a full refinance, not a top-up.


Because of this:

• I lost the benefit of the first loan (7 EMIs already paid, including ~₹20,000 interest).
• My interest schedule restarted from zero.
• A new 36-month loan (@12%) was forced, with a 12-month lock-in.
• I now face a 4% foreclosure charge if I want to close this loan.

My mistake was trusting the process because it was handled by my own Home Branch employee, so I assumed the information was accurate and in my best interest. The entire process happened over phone calls, and the loan amount was disbursed first. Only after receiving and reading the loan agreement did I realize that my old loan had been closed and a completely new loan was created – something that was never explained to me beforehand.

I want to know what action I can take and what would be the best way to seek a resolution.

Thanks

U should not ask for top up instate u should told ask for parallel loan to ur existing loan , u asked top up in that case they are right.