HDFC Bank has submitted its plan to stop repeated glitches in its technology platform after the Reserve Bank of India (RBI) recently pulled the plug on the lender, restricting it from making any new credit card acquisitions.
The plan submitted to the RBI reportedly includes both short and long-term solutions, which may take up to three months to implement. "From there on, it's up to the regulator to inspect the progress and take a call on lifting sanctions," The Economic Times reported citing unnamed sources.
India's largest private bank in market capitalisation was barred from issuing any new credit cards on December 12 after a series of technical glitches. The RBI also stopped the lender from rolling out new digital initiatives such as HDFC 2.0. This dealt a huge blow to HDFC Bank, which on average issues around 1.5 lakh new credit cards every month.
Though the RBI decision may not hurt the bank in the near-term -- since customer spending matures only after two years -- it'll surely hit its credit card business growth, which in December quarter had grown 32 per cent on Q-o-Q basis.
The bank holds a 40 per cent share in the digital payments business, while 26 per cent in the credit card business. Its share in the loans market stands at 10 per cent.
Apologising to customers for disruptions, HDFC Bank new CEO Sashidhar Jagdishan last month had said the bank was working on war footing to strengthen its systems.
"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 the regulator," said Jagdishan in a message to bank customers.
The private bank had three main outages -- one in November 2018, the second one in December 2019 and the latest one on November 21, 2020. The primary reason for the latest one was the power outage in HDFC Bank's primary data centre.