RBI on December 2 had issued an order with regard to certain incidents of outages in HDFC Bank's internet banking, mobile banking and payment utilities over the past 2 years
MUMBAI: In a big blow to HDFC Bank, the Reserve Bank of India (RBI) has asked the private lender to temporarily stop all launches of its digital business generating activities under “Digital 2.0" programme. This includes sourcing of new credit card customers.
The regulator issued an order on 2 December with regard to certain incidents of outages in HDFC Bank's internet banking, mobile banking and payment utilities over the past 2 years, the lender said in a regulatory filing on Thursday. This also includes recent outages in the bank’s internet banking and payment system on 21 November due to a power failure in the primary data centre, the bank said.
“In addition, the order states that the bank’s board examines the lapses and fixes accountability," it said, adding that the restrictions shall be considered for lifting based on satisfactory compliance with the major critical observations as identified by RBI.
These restrictions, albeit temporary, come less than two months after Sashidhar Jagdishan’s appointment as the chief executive of HDFC Bank, when a sharper focus on digital banking is being expected.
HDFC Bank said on Thursday that it has, over the last two years, 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 always endeavoured to provide seamless digital banking services to its customers. 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," it said.
It added that that these measures “will not materially impact its overall business".
In December last year, customers complained that they were unable to pay their loan EMIs or settle credit card bills on time. RBI deputy governor MK Jain had said in December that the regulator has taken into account the outage and has deployed a team of experts to investigate the matter. The RBI team will investigate the reasons behind the outage and accordingly give directions to HDFC Bank, Jain had said.
The December outage was not owing to any cyberattack but because the lender ‘underestimated’ growth in payment volumes and the disruption was more of a capacity issue, Jagdishan, the then executive director had said in January this year.
“What we did not realise is the kind of increase in businesses across liabilities, assets and payment products. Even within payment products, we have been patronising multiple channels, whether it is cards or the unified payments interface (UPI) volumes. We underestimated the growth in these volumes," he had said.