HDFC Bank ordered by RBI to suspend new digital products on outages

The Reserve Bank of India told HDFC Bank to suspend planned digital launches and the adding of new credit card customers after the outages, which occurred over the past two years, the bank said on Dec 3. — Reuters

HDFC Bank Ltd was ordered to curb some digital and credit card operations following a series of glitches at the Indian lender, a rare step by the financial regulator as online transactions surge in the nation.

The Reserve Bank of India told the company to suspend planned digital launches and the adding of new credit card customers after the outages, which occurred over the past two years, HDFC Bank said on Dec 3.

Digital payments have jumped to a record high in India as the coronavirus pandemic dissuades people from going out and using cash. State Bank of India and ICICI Bank Ltd are pushing online services, while Facebook Inc, Inc and Walmart Inc are expanding in the nation’s payments market.

"We have not seen this kind of strong order in the past by the RBI,” said Karthik Srinivasan, senior vice president and group head of the financial sector at ICRA Ltd, the local arm of Moody’s Investors Service. "The RBI might be trying to ensure that there are no system level failures especially at a time when online transactions have picked up due to the pandemic.”

Under the order, the RBI asked that the lender’s board "examines the lapses and fixes accountability,” HDFC Bank said in an exchange filing. The restrictions will be lifted "upon satisfactory compliance,” it added.

HDFC Bank’s new Chief Executive Officer Sashidhar Jagdishan has been keen to expand its digital operations. The lender has been launching several online products, including virtually instant vehicle financing and digital loans to millions of small and mid-sized businesses.

Shares of the country’s most valuable lender fell as much as 2.2% after the announcement.

The most recent glitch happened on Nov 21, halting the Mumbai-based lender’s Internet banking and payments services for several hours. In December 2019, its 49 million customers were locked out of its online banking platform for more than three days.

HDFC Bank said it has taken several measures to fortify its information technology systems in the two years and will engage with the regulator on further steps. – Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Did you find this article insightful?


Next In Tech News

Pony Ma is now China’s second-richest man as Tencent nears trillion-dollar club
Kellyanne Conway accused of posting topless photo of her 16-year-old daughter on Twitter
Widespread Internet outages hit northeast US
Google revives Australia news platform launch amid content payment fight
Students urged to take advantage of Community Internet Centre for PdPR
Bukit Aman: No reports of gov’t websites being hacked so far
Instagram is the go-to tool for US restaurants in the pandemic
UK data watchdog says millions have stopped using WhatsApp
GameStop extends Reddit driven hyper-rally after Musk tweet
Microsoft earnings rise as pandemic boosts cloud computing, Xbox sales

Stories You'll Enjoy