Home » RBI restricts HDFC bank from launching new digital facilities, issuing credit cards

RBI restricts HDFC bank from launching new digital facilities, issuing credit cards

by Raju Vernekar
0 comment 3 minutes read

IT Correspondent
Mumbai, Dec 5:

The Reserve Bank of India (RBI) has asked HDFC Bank, the largest private sector lender in the country, to halt all launches of its digital business generating activities under its programme Digital 2.0 and also asked the bank to stop issuing credit cards to new customers. At 14.97 million, HDFC Bank is the market leader in terms of number of credit cards issued. 
The decision of the banking regulator comes after several incidents of outages in internet banking, mobile banking and payment systems over the past two years, including recent outages in the bank’s internet banking and payment system on 21 November 2020 due to a power failure in the primary data centre. “We have taken help of external expertise, understood what needs to be done further and have substantially implemented the inputs to strengthen our IT infrastructure and systems. Unexpectedly another incident happened on Nov 21,2020 and the primary reason for the same is the power outage in our Primary Data Centre. We are working on war footing to strengthen this area also now,” Sashi Jagdishan, MD and CEO of HDFC Bank said in the statement.  Jagdishan, who took charge in October, said the bank had two outages, one in November 2018 and a second in December 2019. 
A year ago, on 5 December 2019, following customer complaints of outage, RBI deputy governor M.K. Jain had said that a team from the central bank had gone to HDFC Bank to identify the reasons behind the crash in the bank’s online facilities.  
Most of such incidents of outage occurred during the first few days of the month. Volumes of transactions are typically higher during these days — salaries are credited, digital cash transfers are made, equated monthly instalments are debited and so on. According to bank insiders, the existing IT infrastructure was unable to cope up with the ever-increasing volumes. 
In 2018, the bank launched an upgraded mobile banking application. The outage issue started to occur in 2019 when many customers were not able to log in, and later the internet banking platform was also impacted. Most HDFC Bank customers prefer to bank digitally. Digital transactions were 95.1 per cent of the total retail transactions as of March 2020, up from 85.1 per cent from March 2018. The bank has over 5.6 crore customers. 
The only other bank which is bigger than HDFC Bank is the State Bank of India (SBI), but the number of customers who prefer digital banking in HDFC Bank is much higher than any other bank. HDFC Bank launched its new public website in 2019 and clocked in an average 55 million visitors per month. The number of customer queries handled by its AI assistant EVA (extended visual assistant) grew to 23 lakh per month, according to the bank’s annual report of 2019.

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