The Reserve Bank of India (RBI) has advised HDFC Bank to halt any fresh activities under its Digital 2.0 initiative and also stop sourcing new card customers after the bank suffered multiple outages in its internet banking, mobile banking and payment utility services over the past two years.
“The above measures shall be considered for lifting upon satisfactory compliance with the major critical observations as identified by the RBI,” it added.
HDFC Bank meanwhile sought to reassure customers, stating: “(HDFC Bank) expects the current supervisory actions will have no impact on its existing credit cards, digital banking channels and existing operations and believes that these measures will not materially impact its overall business.”
It has had multiple failures in regards to digital services with customers complaining of inability to conduct credit and debit card transactions, internet banking, UPI, IMPS, and other modes of payment.
Here's a look at the digital services failures over the past two years:
>> The latest incident was on November 21, when customers complained of the payment stack being inoperative. Something the bank said was unexpected outage at one of its data centres.
Customers said transactions through HDFC's credit/debit cards, internet banking, UPI, IMPS, and other modes of payment were failing, due to which they could not proceed with their banking-related services. The bank on November 22, however, informed that it had restored the services and said an unexpected outage at one of its data centres led to the transaction failures.
An HDFC Bank official told Moneycontrol the glitch was due to a power outage in DAKC data centre, which has several banks as clients."
>> Prior to this, a similar incident took place on December 2 and 3, 2019, when customers complained that they were unable to pay their loan EMIs or settle credit card bills on time. When contacted the bank had then told Moneycontrol "a technical glitch" had caused the issue and this was being worked on by experts.
"Due to a technical glitch, some of our customers have been having trouble logging into our NetBanking and MobileBanking App. Our experts are working on it on top priority, and we’re confident we’ll be able to restore services shortly. While we deeply regret the inconvenience caused, there’s no cause for undue concern," it said.
It was later found out that the December outage took place because the lender "underestimated" growth in payment volumes and the disruption was more of a capacity issue. The bank also dismissed the rumour of a cyber-attack. It added that the same had been communicated to the banking regulator.
>> Before this, on October 1, 2019, customers of the bank reported issues they were facing while trying to log into the net banking facility.
>> After the outage in December, RBI deputy governor MK Jain had said the regulator had taken into account the outage and deployed a team of experts to "investigate the matter" without naming the bank.
"Our team has gone to really identify the reasons and find out what we can give them (HDFC Bank) as a direction," Jain told reporters at the customary post-policy presser on December 5, 2019.
While replying to a question on whether the RBI is considering a framework for penalising such banks, Jain did not name HDFC Bank, but did say that the RBI is aware of the problem, while explaining that technical glitches had resulted in online banking getting impacted on December 2.>> Later, after the repeat incident in November 2020, when digital services of HDFC Bank were disrupted for over 12 hours from the evening of November 21 till November 22, the RBI sought an explanation from the bank.