RBI Asks HDFC Bank to Stop Issue of New Credit Cards

With a slew of outages in its digital services, HDFC is facing heat from the RBI towards issuing new credit cards

The Reserve Bank of India has asked the HDFC Bank, to temporarily halt all digital banking launches and stop issuing new cards to customers. This is done in the light of the bank being suffered multiple technical glitches over the past two years.

Shares of HDFC Bank fell over 1% on Thursday after reports of the RBI order was made public. While the shares initially rose almost 2% in the morning trade, by 1 pm, it had dipped over 1.5% and was trading 35.5 points lower at Rs 2,240.8. 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 RBI has also asked the private lender to halt other proposed business generating IT products and providing new credit card customers, HDFC added. The order also directed the HDFC Bank board to examine the lapses and fix accountability.

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 believes that these measures would not materially impact its overall business.