HDFC Bank recovers some funds transferred in glitch

  • After the transfer that made several customers millionaires briefly, the bank reversed the credit
  • Around 4,515 customer accounts had already withdrawn 126 crore

Utpal Bhaskar
Updated1 Jul 2022
HDFC Bank’s IT infrastructure had recently come under the Reserve Bank of India’s scanner.
HDFC Bank’s IT infrastructure had recently come under the Reserve Bank of India’s scanner.

India’s largest private lender HDFC Bank Ltd is trying to collect around 100 crore from 4,468 customer accounts that saw money withdrawals after a technical glitch in May transferred around 1,000 crore into these accounts, two people aware of the development said.

After the erroneous transfer that made several customers millionaires briefly, the bank swung into action by reversing the credit. However, by then, 4,515 customer accounts had withdrawn around 126 crore.

The issue assumes significance given that HDFC Bank’s IT infrastructure had recently come under the Reserve Bank of India’s (RBI) scanner. In December 2020, the banking regulator barred HDFC Bank from launching new digital products and signing up new credit card customers. The card restrictions were lifted in August last year, while the digital curbs were withdrawn in March.

“We have utilized this time to draw up short, medium, and long-term plans to meet the evolving digital requirements of our customers, and we will roll out these initiatives in the days to come,” HDFC Bank said in a 12 March statement.

HDFC Bank managed to recover around 26 crore from 47 customer accounts through means such as recall of fund transfer for those who used electronic means such as National Electronic Funds Transfer (NEFT), real-time gross settlement (RTGS) and Immediate Payment Service (IMPS) to transfer that money, but is still trying to recover around 100 crore, with some customers claiming they have already spent that money.

“The issue of the said money transfer has been almost completely resolved. To put matters in context, a display error was noticed in balances of a few customer accounts post a system patch upgrade on the night of May 28/ early morning of May 29, 2022. This caused some customers of the Bank to note an erroneous balance in their account. Post the proactive detection by the Bank, the issue was remediated for all these accounts. These customers can now operate their accounts for which they are intended,” a HDFC Bank spokesperson said in a 24 June statement to Mint.

HDFC Bank is also exploring how to recover money spent through Unified Payments Interface (UPI) transactions at merchant establishments. Also, in order to recover the money from one HDFC Bank account, all HDFC accounts of the same customer were frozen to recoup it. Where the money was transferred to other bank accounts via third-party transfers, HDFC Bank is corresponding with those banks to get the amount reversed. Also, the fixed deposits with HDFC Bank wherein the transferred amount was parked are being recovered.

“We haven’t heard of such a transfer happening in a long time. HDFC Bank is doing everything to get the money back from those who have withdrawn money. While a majority of accounts are from Tamil Nadu, there have also been instances from other parts of the country,” said one of the two people cited above, requesting anonymity.

As of 31 March, HDFC Bank had deposits of 15.6 trillion. It has 6,342 branches, with plans to double the number of branches in three years.

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