Private sector lender HDFC Bank on Thursday said the Reserve Bank of India (RBI) has asked it temporarily stop all launches of its upcoming digital business-generating activities and sourcing of new credit card customers after outage at its data centre which impacted operations last month.
The decision of the banking regulator comes after several incidents of outages in internet banking, mobile banking and payment systems over the past two years, including recent outages in the bank's internet banking and payment system on 21 November 2020 due to a power failure in the primary data centre.
The December outage was not owing to any cyberattack but because the lender "underestimated" growth in payment volumes and the disruption was more of a capacity issue, Jagdishan, the then executive director had said in January this year.
The central bank has also asked HDFC Bank to ensure that its board "examines the lapses and fixes accountability". "Only when we see a need for regulatory intervention, only when we see that regulatory intervention is required, in the best interest of the depositors we intervene", Das said. About the 21 November outage as well, there were users complaining about instances like being stuck at merchant establishments as payments were not going through. The bank has over 5.6 crore customers. Its larger rival SBI had to face ire of customers earlier this week, with complaints of transaction failures.
Yes Bank had to be bailed-out in an act led by SBI, where the country's largest lender and other financial institutions poured-in over Rs 10,000 crore of capital to get the troubled lender out.
HDFC said that the Reserve Bank of India "has advised the bank to temporarily stop all launches of the digital business-generating activities planned under its program Digital 2.0". "We take this opportunity to assure our existing customers that there is no reason to worry", said HDFC Bank MD and CEO Sashidhar Jagdishan.
However, Suresh Ganapathy of Macquarie said in a note that when a bank is growing at a rapid pace and a way faster than the system, challenges are bound to crop up.
HDFC Bank informed the stock exchange about the development on Wednesday. Added to that, it has a market share of 35-40 per cent in payments.
He added that today's move by the RBI would have only a limited impact on HDFC Bank's profitability vis-à-vis issuing new cards. While a market share in credit cards on an outstanding basis was 26 per cent, on an incremental basis, it was 31 per cent in the calendar year till date.