HDFC Bank slips after RBI asks bank to halt digital launches, sourcing new credit cards

HDFC Bank declined 0.75% to Rs 1396.40 after the Reserve Bank of India (RBI) ordered the private lender to halt all digital launches and issuance of credit cards on a temporary basis.

On 2 December 2020, RBI issued an order to HDFC Bank with regard to certain incidents of outages in the internet banking, mobile banking, payment utilities of the bank over the past two years, including the recent outages in the bank's internet banking and payment system on 21 November 2020 due to a power failure in the primary data centre.

RBI advised HDFC Bank to temporarily stop all launches of the digital business generating activities planned under its program - Digital 2.0 (to be launched) and other proposed business generating IT applications; and sourcing of new credit card customers. In addition, RBI ordered HDFC Bank's board to 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, HDFC Bank said in a statement issued on 3 December 2020.

HDFC Bank said that over the last two years it has taken several measures to fortify its IT systems and will continue to work swiftly to close out the balance and will continue to engage with the regulator in this regard.

"The bank has always endeavored to provide seamless digital banking services to its customers. The bank has been taking conscious, concrete steps to remedy the recent outages on its digital banking channels and assures its customers that it expects the current supervisory actions will have no impact on its existing credit cards, digital banking channels and existing operations. The bank believes that these measures will not materially impact its overall business," HDFC Bank said.

The scrip came off 2.46% from the day's high of Rs 1431.60 and traded with small losses.

HDFC Bank is one of India's leading private banks. As of 30 September 2020, the bank has 5,430 branches and 15,292 ATMs across 2,848 cities.

The bank's net profit increased 18.4% to Rs 7513.11 crore on a 6.9% rise in total income to Rs 36,069 crore in Q2 September 2020 over Q2 September 2019.

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