After the Reserve Bank of India (RBI) directed HDFC Bank to stop all launches of digital business generating activities after a series of outage incidents, the apex bank has appointed an IT firm for carrying out a special audit of the entire IT infrastructure of India's biggest private lender. The name of the 'IT firm' has not been disclosed so far.
"RBI has appointed an external professional IT firm for carrying out a special audit of the entire IT infrastructure of the Bank under Section 30 (1-B) of the Banking Regulation Act, 1949 ("the Act"), at the cost of the Bank under Section 30 (1-C) of the Act," HDFC Bank said in a stock exchange filing today.
The bank said it will extend its cooperation to the external professional IT company appointed by the RBI.
The RBI's recent order comes after it advised HDFC Bank to temporarily stop all new launches of digital business generating activities planned under its program Digital 2.0 on December 3, 2020.
The bank was working on many new technologies like robotic process automation (RPA), machine learning (ML), artificial intelligence (AI), Blockchain and the use of cloud technology to take banking to the next level. The RBI also said the bank's Board should examine lapses and fix accountability.
HDFC Bank was also barred from issuing any new credit cards on December 12 after a series of technical glitches.
The bank had recently submitted a plan to stop repeated glitches in its technology platform. It includes both short and long-term solutions, which may take up to three months to implement. 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.
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.
The RBI's decision to issue a halt notice was taken based on recent incidents of outages in internet banking, mobile banking and payment services over a two-year period. The most recent outage took place in November 2020 due to a power failure in the primary data centre.
On November 21, HDFC Bank's entire payment stack had gone down due to a technical glitch. The unexplained outage of the Bank's data centres halted internet banking, UPI, IMPS, and ATM operations. Before that, the private bank had two outages, one in November 2018 and second one in December 2019.
Meanwhile, the shares of HDFC Bank were trading up 4.94 per cent or Rs 74.75 at Rs 1,552 on the BSE today.