RBI asks HDFC Bank to halt fresh digital initiatives, sourcing of new credit card customers after multiple digital failures

HDFC Bank (Image: PTI)

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The Reserve Bank of India (RBI) has advised HDFC Bank to halt any fresh activities under its Digital 2.0 initiative and also stop sourcing new card customers after the bank suffered multiple outages in its internet banking, mobile banking and payment utility services over the past two years.

In an order dated December 2, 2020, the central bank also took note of the most recent outage on November 21, which occurred due to a power failure in the bank’s primary data centre.

In its order, the RBI has advised the bank to – firstly temporarily stop all launches of its digital business generating activities planned under Digital 2.0 and other proposed business generating IT applications, and secondly halt sourcing of new credit card customers.

The order also states that HDFC Bank’s board must examine the lapses and fix accountability.

“The above measures shall be considered for lifting upon satisfactory compliance with the major critical observations as identified by the RBI,” it added.

The Bank in its filing to the exchanges said it has taken “several measures to fortify its IT systems” over the last two years and will continue to work to “swiftly to close out the balance and would continue to engage with the Regulator in this regard.”

It also sought to reassure customers, stating: “(HDFC Bank) expects  the  current  supervisory  actions  will  have  no  impact  on  its  existing  credit  cards,  digital banking channels and existing operations and believes that these measures will not materially impact its overall business.”

“The  Bank has always endeavoured to provide seamless digital banking services to its customers and has been taking conscious, concrete steps to remedy the recent outages on its digital banking channels,” it added.

HDFC Bank has had multiple failures in regards to digital services with customers complaining of inability to conduct credit and debit card transactions, internet banking, UPI, IMPS, and other modes of payment.

On November 21, customers complained of the payment stack being inoperative,  somehing the bank said was an unexpected outage at one of its data centres.

An HDFC Bank official told Moneycontrol the glitch was due to a power outage in DAKC data centre, which has several banks as clients."

Another similar incident took place on December 3, 2019, with customers complaining that they were unable to pay their loan EMIs or settle credit card bills on time. When contacted the bank then told Moneycontrol "a technical glitch" had caused the issue and this was being worked on by experts.

"Due to a technical glitch, some of our customers have been having trouble logging into our NetBanking and MobileBanking App. Our experts are working on it on top priority, and we’re confident we’ll be able to restore services shortly. While we deeply regret the inconvenience caused, there’s no cause for undue concern," it said.

Later, it was found out that the December outage took place because the lender "underestimated" growth in payment volumes and the disruption was more of a capacity issue. The bank also dismissed the rumour of a cyber-attack. It added that the same had been communicated to the banking regulator.