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RBI orders HDFC Bank to stop digital launches, issuance of new credit cards

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The Reserve Bank of India has ordered private lender HDFC Bank to halt digital launches and adding more credit card customers.

The development comes after the bank customers faced a number of incidents of outages in the internet banking/ mobile banking/ payment utilities of the bank over the past 2 years.

One of the recent outages in the bank’s internet banking and payment system was reported on November 21, 2020, due to a power failure in the primary data centre.

As a result of the RBI order, HDFC bank shares declined in Thursday’s trading. The shares gave up their early-morning gains of more than 1 per cent, and at 12:00 pm, were trading lower by 1.18 per cent at Rs 1,390.35 on the BSE.

HDFC Bank in a regulatory filing said RBI has advised the bank to temporarily stop all launches of digital business generating activities planned under its program Digital 2.0 and sourcing of new credit card customers. The RBI’s order has directed the bank’s board to examine the lapses and fix accountability.

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Notably, HDFC Bank’s new CEO Sashidhar Jagdishan has been keen to expand its digital operations. The lender has been launching several online products, including virtually instant vehicle financing and digital loans to millions of small and mid-sized businesses.

Taken several measures, says HDFC

The bank in its statement also said that it has taken several measures over the last two years to fortify IT systems and “will continue to work swiftly to close out the balance and engage with the regulator in this regard”.

Besides assuring that it is taking concrete steps to fix recent outages on its digital banking channels, HDFC Bank also said that the current supervisory actions will have “no impact on its existing credit cards, digital banking channels and operations”.

“The bank believes that these measures will not materially impact its overall business,” added the bank’s statement.

 

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