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RBI’s diktat on HDFC Bank: What should existing customers and fresh credit card applicants do?

Existing HDFC Bank credit card holders can swipe the card at outlets and use it online for any transactions. But if you are just going to apply for a card, there will be a delay in processing your application

December 03, 2020 / 05:55 PM IST

Due to frequent outages in HDFC Bank’s network, the Reserve Bank of India (RBI) issued an order on Wednesday, asking the bank to temporarily halt sourcing of new credit cards and stop the launch of its digital business-generating activities planned under Digital 2.0.

RBI’s action comes after the central bank, on November 23, sought an explanation from HDFC Bank after its digital services were disrupted from the evening of November 21 till November 22 morning – for over 12 hours. During this period, all the transactions through HDFC bank’s credit and debit cards, internet banking, UPI, IMPS, and other modes of payment had failed. Several customers had complained on the official twitter handle of the bank. This is not the first time a digital outage occurred and HDFC Bank’s customers suffered.

In December 2019, HDFC Bank’s digital banking services were affected for several days due to an alleged technical glitch in one of its data centres. The RBI expert team had then examined the issue and gave directions to the bank to fix the problems. There was a glitch in November 2018 as well.

On all the occasions, the bank quickly got into action to resolve the technical glitch and solve the problems that customers reported on social media. However, this has left a question mark based on several customers’ experiences as to whether it’s safe to depend on the HDFC Bank digital channels. What should current and prospective customers, especially credit card applicants, do now?

Will the current supervisory action from the RBI have an impact on existing customers and their usage of the digital services of the bank?

Close

There is no problem with the bank’s digital services if you have a savings account, salary account or a credit card.

An official of the HDFC bank says, “Existing customers don’t need to panic, as there is no impact on our services. You can continue to transact without any concern, through any of the digital banking channels (mobile and net banking).” The existing credit card holders can also swipe the card at outlets and use it online for any transactions.

I had applied for a HDFC Bank credit card. What will happen to my application?

The order from the RBI has advised the bank to temporarily stop sourcing new credit card customers. “So, a customer – who is already in the system and where the application is in process – will be issued the credit card,” says an official from HDFC bank.

What were the planned activities under Digital 2.0 that would be impacted by RBI’s order?

In Digital 2.0, the bank generally looks at improving or upgrading the mobile banking application and net banking services to the customers. This order from RBI has stopped the release of any updated version of the mobile banking application. Now, a new updated version of the banking app will be made available only after completing a compliance process set by the RBI.

“However, the bank’s net and mobile banking services will not be affected due to temporary halt on digital 2.0 activities. Customers can continue to use digital banking without any concern,” says an official from the HDFC bank.

When will the restrictions on issuance of new credit cards and planned activities under Digital 2.0 be lifted?

The order from the RBI states that HDFC Bank’s board must examine the lapses that led to the digital outages and fix accountability. The above-mentioned restrictions will be lifted upon satisfactory compliance with the major critical observations as identified by the RBI.

Should I wait or do I apply for a credit card elsewhere?

The RBI has not mentioned a timeframe for lifting the restrictions in the order. So, if you are looking for a credit card immediately, then it makes sense to apply to another bank. Understand the annual fees, benefits, features and terms of the card before applying elsewhere. If your application is already submitted, it would still be processed by the bank.
Hiral Thanawala
first published: Dec 3, 2020 04:17 pm
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