RBI orders HDFC Bank to stop digital launches, sign up new credit card users after latest outage

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Updated: Dec 03, 2020 11:42 AM

The order dated December 2 comes after HDFC Bank’s internet banking and payment system were disrupted by yet another outage on November 21.

The other concerned its unsecured personal loan business, where it had been preparing to substantially digitise the open market acquisition over a three to five-month horizon.The other concerned its unsecured personal loan business, where it had been preparing to substantially digitise the open market acquisition over a three to five-month horizon.

The Reserve Bank of India (RBI) has ordered India’s largest private sector bank HDFC Bank to temporarily halt all  launches of the Digital Business generating activities planned under its program Digital 2.0, and other proposed business generating IT applications, while also ordering the bank to stop sourcing new credit card customers. The order dated December 2 comes after HDFC Bank’s internet banking and payment system were disrupted by yet another outage on November 21. HDFC Bank has drawn criticism for various such incidents over the past two years. RBI has directed HDFC Bank’s top examine the lapses and fix accountability.

HDFC Bank is one India’s largest private sector bank and has a market capitalization of Rs 7.7 lakh crore. The RBI will only HDFC Bank to add new credit card customers and launch new digital services on “satisfactory compliance with the major critical observations”. HDFC Bank’s latest digital services outage was due to a power failure at the lenders data center. This was HDFC Bank’s third such failure in two years. The order will also put pressure on the bank’s newly appointed CEO, Shashidhar Jagadeeshan. This was the first service outage under the new CEO’s watch who has completed a little over a month of his tenure after replacing Aditya Puri earlier in October. 

“The Bank over the last two years has taken several measures to fortify its IT systems and will continue to work swiftly  to close out the balance and would continue to engage with the Regulator in this regard,” the lender said in a regulatory filing. “The  Bank  has always endeavored  to  provide  seamless  digital  banking  services  to  its  customers, HDFC Bank added. The private lender assured customers that the current supervisory action will not have any impact on its existing operations.

The recent outage hit customers as the bank’s ATMs, cards, net banking, and even its UPI channels were not functioning normally. The previous two disruptions were in December of 2019 and December of 2018. The central bank had last year said that it had sent a team to examine the outage at HDFC Bank. “We have checked it up and it has been restored fully. Our team has gone to identify the reasons and find out what we can give them as a direction,” RBI deputy governor MK Jain had then said.

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