The Economic Times
English EditionEnglish Editionहिन्दी
| E-Paper
Search
+

    HDFC Bank submits outage control plan

    Synopsis

    The bank is working on multiple immediate and long-term solutions as part of its internal review. “The action plan that the bank is working on could take anywhere between 10-12 weeks to implement,” said one of the persons.

    HDFC Bank, which issues nearly 150,000 credit cards a month, had been directed by the regulator to stop doing so on December 12 until it had sorted out the problems.
    Mumbai: has submitted a plan to the Reserve Bank of India (RBI) outlining remedies for repeated glitches in the bank’s technology platform over the past three years, said people with knowledge of the matter. It’s awaiting a response from the regulator on when restrictions imposed in December on new card acquisition will be lifted, they said.

    The bank is working on multiple immediate and long-term solutions as part of its internal review. “The action plan that the bank is working on could take anywhere between 10-12 weeks to implement,” said one of the persons. “From there on, it’s up to the regulator to inspect the progress and take a call on lifting sanctions.”

    The lender is expected to invite the RBI for inspection, once its review is over.

    HDFC Bank, which issues nearly 150,000 credit cards a month, had been directed by the regulator to stop doing so on December 12 until it had sorted out the problems. The bank also couldn’t launch any new digital initiatives.

    According to analysts, the suspension of new retail card acquisition won’t hurt the private lender in the near term as it takes nearly two years for customer spending to mature. The bank grew its credit card business by 32% sequentially in the December quarter.

    “The tech resolution will take time and may be this spills over to end of June 2021 in our view,” said Suresh Ganapathy, associate director, Macquarie Capital. “The thing is they want to be very sure everything is in place, ramp up capacity and then call RBI for due diligence. As of now, inability to give credit cards hasn’t affected account openings.”

    ETD-1-19012021

    40% Mkt Share in Digital Payments
    “But if this continues beyond June, we can see some impact coming in the near term,” he said.

    CEO Sashidhar Jagdishan had apologised to customers for the disruptions and asked them to continue transacting with the bank. The RBI’s move was a blow to the bank’s ambition to expand its digital payments business, where it commands a 40% market share. HDFC Bank is a systemically important lender with a 10% share of the loans market and 26% of the credit card business.

    The regulator’s action followed the bank’s inability to fix the problem despite formal instructions over the past few years.
    (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    2 Comments on this Story

    Praker 43 days ago
    HDFC expect cheaper IT solution..
    Panchanadeeswaran Janakiraman43 days ago
    No question on SBI Card ?
    Read before you invest. Insights on HDFC Bank Ltd.. Explore Now
    The Economic Times