RBI applies brake to HDFC Bank’s existing and upcoming digital activities

As reported by Moneycontrol, the Reserve Bank of India (RBI) has prohibited HDFC Bank from sourcing new credit card customers and halted its upcoming digital activities. The Reserve Bank of India (RBI) has issued this order on December 2, 2020, to HDFC Bank in the backdrop of outage incidents in its internet banking, mobile banking and payment utility services over the past two years.

The central bank also took cognizance of the most recent outage on November 21, which happened due to a power failure in the bank’s primary data centre. In its order, the RBI has advised the bank to – firstly temporarily stop all launches of its digital business generating activities chalked under Digital 2.0 and other proposed business generating IT applications, and secondly halt provision of new credit card customers.

The order also states that HDFC Bank’s board must investigate the lapses and fix accountability. 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 working to “swiftly to close out the balance and would continue to engage with the regulator in this regard.”

It also 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 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 maintained a history of 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. The latest incident on November 21, when customers complained of the payment stack being inoperative. An HDFC Bank official told Moneycontrol, the glitch resulted from a power outage in DAKC data centre, which has several banks as clients.” 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.

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