In a massive blow to HDFC Bank, the RBI (Reserve Bank of India) has instructed the private lender to temporarily halt its digital business generating activities under the Digital 2.0 program. It includes issuing new credit cards and digital launches.
According to a filing with the stock exchanges, RBI has directed HDFC Bank to stop issuing new credit cards. Moreover, HDFC Bank will need to halt the launch of all the digital businesses for now.
Recent outages result in the interruption of online services
The order by RBI has come amidst a notable rise in the number of outages. There have been numerous incidents over the last two years with the most recent incident occurring on November 21st. However, HDFC Bank claims that these orders will not impact its existing operations, digital banking channels, and credit card users.
An order was issued by the regulator on December 2nd keeping in mind the different incidents of outages in HDFC Bank’s mobile banking, internet banking, and payment utilities of the past. It also includes the recent outages in HDFC Bank’s online banking and payment system on November 21st because of power failure in the primary data center.
The restrictions, although temporary, come within two months of Sashidhar Jagdishan’s appointment as the new chief executive of HDFC Bank. The orders come at a time when monthly trends are pointing towards faster pickup in credit card additions and spends. In fact, October saw the credit card requests crossing pre-COVID levels.
Likely duration of the RBI restrictions
RBI has advised HDFC Bank’s board to thoroughly examine any lapses and fix them accordingly.
HDFC, on its part, claims that over the last 24 months has taken measures to fortify its IT systems. Moreover, it will continue working towards closing out the balance and engage with the regulator in this regard. According to HDFC Bank, it is taking conscious, concrete steps for remedying the outages on the digital banking channels.
RBI claims it will only lift the restrictions once it is thoroughly satisfied with the compliance of major critical observations mode concerning the bank.