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RBI asks HDFC Bank to halt issue of new credit cards, planned activities under Digital 2.0

RBI also took note of the most recent outage on November 21, which occurred due to a power failure in HDFC Bank’s primary data centre. HDFC Bank says it expects the actions will have no impact on its existing credit cards, digital banking channels.

December 03, 2020 / 11:36 AM IST

The Reserve Bank of India (RBI) has asked HDFC Bank to temporarily halt sourcing new credit cards and stop the launch of its digital business-generating activities planned under Digital 2.0 and other proposed business generating IT applications.

The RBI issued the order dated December 2, 2020, to HDFC Bank.

The RBI 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.

The order also states that HDFC Bank’s board must examine the lapses and fix accountability.

“The above measures shall be considered for lifting (the restrictions) upon satisfactory compliance with the major critical observations as identified by the RBI,” it added.

In fact, the RBI order takes into account incidents of outage in HDFC Bank’s internet banking, mobile banking and payment utility services over the past two years.

HDFC Bank had attributed the outage on November 21 to a power failure in the bank’s primary data centre.

Complaints against HDFC Bank

On November 21, customers had complained of the payment stack being inoperative. The bank said this was due to an unexpected outage at one of its data centres.

An HDFC Bank official had told Moneycontrol that the glitch was due to a power outage in DAKC data centre, Mumbai, which has several banks as clients.

A similar incident took place on December 3, 2019, with customers complaining that they were unable to pay their loan EMIs or settle credit card bills on time. When contacted, the bank then told Moneycontrol that “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 had said.

Later, it was found out that the outage took place because the bank "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.

HDFC Bank’s response

HDFC Bank 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.”

The bank, in its filing to the exchanges, said it has taken “several measures to fortify its IT systems” over the last two years and will continue to work to “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 and has been taking conscious, concrete steps to remedy the recent outages on its digital banking channels,” it added.

HDFC Bank 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.

Moneycontrol News
first published: Dec 3, 2020 10:49 am