Home / Industry / Banking /  RBI allows HDFC Bank to issue new credit cards after 8 months of ban: Report

The Reserve Bank of India (RBI) on Tuesday allowed HDFC Bank to issue new credit cards after 8 months of imposing a ban as a penalty due to technical glitches, reported news agency Reuters. 

However, RBI stated that its temporary ban on the lender for introducing new, digital initiative continues, the report added. 

As per other reports, the central bank has asked the lender to submit a board-approved letter indicating continued compliance with its IT examination report.

In December, the RBI acted against repeated technological outages at HDFC Bank over two years by slapping unprecedented penalties, which included a ban on any new credit card issuance and also prohibition on launching new digital initiatives.

The bank has been in constant discussion with RBI ever since the ban was imposed and has upgraded its systems as per the indications from the regulator. 

Recently, the bank’s head of consumer finance, digital banking and information technology, Parag Rao, said that it has used the last six months to “introspect, re-engineer and innovate" about the cards business, where it has 15.5 million customers.

The bank has lost its market share by a couple of percentage points because of the ban, but the actions taken internally have ensured that it continues to hold on to market share by spends, he said.

Moreover, while addressing shareholders at his first annual general meeting as the managing director and chief executive of the largest private sector lender, Shashidhar Jagdishan also clarified that HDFC Bank has complied with 85 per cent of RBI's asks on technology, and the ball is now in the regulator's court on when to lift the ban on issuing new credit cards.

He had said a technology audit is also over and the RBI will now be independently taking a view on when to lift the penal actions taken against the bank.

"We have given a milestone to the regulator in terms of what are the things we are doing on technology, complying with their advisories and directives. We have covered a very significant portion as we speak. Almost 85 per cent of what we had to do has been covered," Jagdsihan, who has been with the lender for over two decades and worked as the 'change agent' in the years leading to his elevation, said.

"The ball is in the regulator's court. As they deem fit, as they see that we are on the right track, I am sure at some point of time, they will lift the embargo," he added.

HDFC Bank is not the only bank to suffer RBI's harsh penalties over months. The central bank had also ordered Mastercard and American Express to not sell any new cards for data localisation non-compliance earlier. 

In this month's monetary policy review, RBI governor Shaktikanta Das stressed that a keenness to ensure compliance to regulatory guidelines has led the RBI to initiate strong actions against entities like HDFC Bank, Mastercard and American Express.

"Whenever there are deviations or violations of the regulatory guidelines, as the regulator, it is our job, it is our responsibility to ensure compliance.

"All our actions are an outcome of our keenness and our responsibility to ensure that regulatory guidelines are complied," Das told reporters in the customary post-policy review press conference.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
Get alerts on WhatsApp
My ReadsRedeem a Gift CardLogout