HDFC Bank MD and CEO Sashi Jagdishan has apologised to the bank's stakeholders and customers after facing flak for repeated tech outages in the last couple of years and being barred by the Reserve Bank of India (RBI) from selling any new credit cards or launching new digital products.
Admitting the glitch, Jagdishan said, "In the last couple of years our technological capability has been questioned, justifiably."
He added that in the last 28 months, the bank has been in spotlight "for the wrong reasons" when it comes to technology.
Jagdishan, in a note in the bank's annual report for 2020-21, also acknowledged deficiencies in compliance, coupled with technology problems that led to regulatory actions.
The latest technology downtime led to the RBI banning HDFC Bank from issuing new credit cards as well as putting on hold new launches under the Digital 2.0 initiative, he said, adding that a third-party audit of bank's IT system, ordered by the central bank, is over and the bank is now awaiting a decision from the RBI.
Offering a detailed apology on the recent outages, Jagdishan said, "As a bank we are certainly sorry for what has happened. And have taken this as an opportunity to improve and redouble our efforts to fix this problem for good."
Talking about deficiencies in compliance regarding the sale of GPS products, he stated that there has been some discussion around the same.
"For many years we had been bundling the financing of FPS systems and cars. The teams believed this was a routine lending activity. Also, a particular vendor had entered into an arrangement with us directly," Jagdishan noted. He further stated that these products were never sold on a standalone basis and were only bundled along with the purchase of cars.
On RBI's penalty of Rs 10 crore on the bank for deficiencies in regulatory compliances with regard to its auto loan portfolio, Jagdishan said, "We accept this verdict and will comply with the directives."
Following the above-mentioned incidents, he said, impelled the bank to reiterate the importance of culture, and redefine business objectives with three Cs in mind - Culture, Conscience and Customers.
"Customers are at the heart of everything we do. But every individual has to ask himself: Am I doing the right thing for the customer? Am I doing the right thing for the organisation? Does my conscience permit this?" Jagdishan noted.
"As a bank we have always taken pride in our integrity. However, the unscrupulous practices of a few people have made all of us resolve for far greater process controls to address this. I am personally determined to fix this," he added.
HDFC Bank reported an increase of 18.5 per cent in its net profit for the financial year 2020-21 at Rs 31,116.5 crore.
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