The Reserve Bank of India has asked the Housing Development Finance Corporation, or the HDFC Bank, to temporarily halt all digital banking launches and stop sourcing new cards to customers, after the bank suffered multiple technical glitches over the past two years, the Hindustan Times reported on Thursday.
Shares of HDFC Bank fell over 2% to close at Rs 1,377.05 a piece on the Bombay Stock Exchange after reports of the RBI order was made public. Shares of its parent company, HDFC, a housing loan company also dipped by nearly 1% to close at Rs 2,253.90.
In a statement to the stock exchanges, the HDFC Bank said the RBI has issued an order dated December 2, with regard to “certain incidents of outages in internet banking/ mobile banking/ payment utilities of the bank over the past two years, including the recent outages in the bank’s internet banking and payment system on November 21, 2020, due to a power failure in the primary data centre”.
HDFC said that the Reserve Bank of India “has advised the bank to temporarily stop all launches of the digital business-generating activities planned under its program Digital 2.0”. The central bank also asked the private lender to halt other proposed business generating Information Technology applications and sourcing of new credit card customers, HDFC added.
The order directed the HDFC Bank board to examine the lapses and fix accountability as well.
HDFC Bank said it would consider lifting the measures after “satisfactory compliance with the major critical observations as identified by the RBI”. The bank said that over the last two years, it had 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 bank has been taking conscious, concrete steps to remedy the recent outages on its digital banking channels and assures its customers that it expects the current supervisory actions will have no impact on its existing credit cards, digital banking channels and existing operations,” the statement added.
The bank added that it believed that these measures would not materially impact its overall business.
HDFC CEO apologises, says they are ‘working on a war footing’
HDFC Bank Chief Executive Officer Sashidhar Jagdishan apologised to customers after the RBI order and assured them that there was no reason to worry. “We realise that as our valued customer, you expect us to maintain a very high standard of service quality and experience,” the CEO said in a statement. “And sometimes, we have not been able to live up to your expectations. For that, please accept our sincere apologies.”
Jadgishan admitted to three outages – one in November 2018, another in December 2019 and the latest one in November 2020. He added that the primary reason was a power outage in the bank’s Primary Data Centre. “We are working on a war footing to strengthen this area also now,” said the chief executive officer.
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