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RBI orders HDFC Bank to examine lapses within digital platforms

HDFC Bank building

HDFC Bank Ltd has been ordered by the Reserve Bank of India (RBI) to examine lapses and fix accountability with regards to a number of incidents over the last two years which saw the banks’ internet banking, mobile banking, and payments channels go offline, according to a stock exchange filing by the bank on Thursday.

In a December 2 order, the RBI has also advised the bank to temporarily stop all launches of its digital business activities, under the banks’ Digital 2.0 initiative, which is yet to be launched, and other proposed business generating IT applications. The central bank has advised the bank to temporarily stop sourcing new credit card customers, the filing says.

“The above measures shall be considered for lifting upon satisfactory compliance with the major critical observations as identified by the RBI. The Bank over the last two years has taken several measures to fortify its IT systems and will continue to work swiftly to close out the balance and would continue to engage with the regulator in this regard,” HDFC Bank said in the filing.

We have reached out to HDFC Bank for comments. We will update this article with their responses.

Recently, over the weekend of November 21-22, HDFC Bank’s digital platforms went offline due to the power outage at the bank’s data centre at the Dhirubhai Ambani Knowledge CITY. Though bank had managed to resolve the issue overnight, the regulator took notice and sought an explanation from the bank. In December last year, there was a “technical glitch” that led to the banks’ customers unable to log-in to the internet banking platform and mobile banking app. Further, two years ago the bank had launched a new mobile banking app but due to issues with its roll-out, it was forced to restore an older version of the app and re-launch the new app.

Earlier in November, the bank launched an updated version of its Smart Hub offering, which is the banks’ payments ecosystem for merchants.

HDFC Bank is the country’s second largest bank with over 56 million customers, nearly ₹11.5 lakh crore in deposits, 14.5 million credit cards, around 2 million merchant payment points and nearly 15,000 ATMs, according to its 2019-20 annual report. Around 95.1% of all retail transactions of the bank take place digitally, it said.

In a statement issued on the banks’ website, Sashidhar Jagdishan, the newly appointed managing director and chief executive officer at HDFC Bank said that existing customers did not have to worry and that they could continue to transact with the bank. “We had two outages, one in November 2018 and second one in Dec 2019. We have taken help of external expertise, understood what needs to be done further and have substantially implemented the inputs to strengthen our IT infrastructure and systems. Unexpectedly another incident happened on Nov 21, 2020 and the primary reason for the same is the power outage in our Primary Data Centre. We are working on war footing to strengthen this area also now,” he said.

“Some of our strategic digital initiatives to improve the front end digital experience, improve digital origination, straight through processing, next generation of mobile and internet banking, APIs based banking on the edge etc would now be readied and launched post the approval and clearance from regulator,” Jagdishan said.

 

**Update (December 3, 2020 4:05 pm): Updated with statement from Sashidhar Jagdishan, managing director and chief executive officer, HDFC Bank. Originally published on December 3, 2020 at 11:48 am.

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