Finance
By: Shree1news, 03 DEC 2020
Following frequent outages in on-line services over the previous two years, the Reserve Bank of India (RBI) has ordered HDFC Bank to suspend planned digital launches and the addition of recent bank card clients.
The banking regulator has suggested that the board of the bank should look into why these outages are occurring and discover out who’s accountable. It additional added that the restrictions shall be thought of for lifting upon satisfactory compliance with essential observations as recognized by the RBI, the order acknowledged.
“The RBI vide said Order has advised the 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 (ii) sourcing of new credit card customers,” HDFC Bank mentioned in a regulatory filing.
However, there will be no impact of the RBI order on current operations including credit cards and digital banking.
“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 present supervisory actions will have no impact on its existing credit cards, digital banking channels and current operations. The bank believes that these measures will not materially impact its overall business,” added HDFC Bank. Despite the assurances, shares of the bank fell over a per cent to Rs 1,385.30 on BSE.
The order seeks to repair system stage failures at Indian banks and is seen as an uncommon step by the regulator. It comes after the recent major outage on November 21 due to a power failure in the major data centre, the third such occasion in a span of two years on the nation’s largest bank by market capitalisation of over Rs. 8 lakh crore as of November 2020. The central bank has sought an explanation from HDFC Bank behind the info centre outage that disrupted services on UPI, ATMs and card channels for a number of hours.
The bank had confronted the same outage on its cellular software in 2018 that pressured the financial institution to roll again the launch. Then in December 2019, prospects complained of not with the ability to pay their EMIs or settle bank card payments on time, prompting RBI to initiate the same probe. Sashidhar Jagdishan, the then executive director, cited growing payday transactional actions as the explanation. It was extra of a capacity issue due to the bank’s “underestimated” growth in payment volumes, and not owing to any external cyber attack, he added.
HDFC Bank is the highest issuer of credit cards within the country with 1.5 crore cards in force as on September 30, 2020 and has additionally issued about 3.38 crore debit cards. It has a wide network of 15,292 ATMs across 2,848 cities.
Recently, the bank had created a digital transaction monitoring committee, headed by board member Srikanth Nadhamuni, to promote such services. About 90 per cent of its whole transactions come from digital channels, the bank mentioned in its annual report. A sudden surge in adoption of digital payments because the onset of Covid-19 has examined the country’s digital infrastructure. UPI transactions grew 6.7 per cent sequentially to 2.2 billion in November.
Around 1.21 billion transactions have been recorded in November 2019. The value of UPI-based payments through the month was at Rs 3.90 lakh crore compared to Rs 3.86 lakh crore in October, and Rs. 1.51 lakh crore in April 2020. Whereas traditional banks are pushing on-line service, newcomers like Facebook, Amazon, and Walmart Inc. are also aggressively increasing within the nation’s payments market.
Source: A-N
