Mumbai: Private sector lender HDFC Bank has provided a remedial plan on its e-banking outages to the Reserve Bank of India (RBI) and expects the strategies to take shape in 10-12 weeks, following which it will request an inspection by the regulator.
The bank is also making long-term upgrades in technology that will take 12-18 months, Srinivasan Vaidyanathan, the chief financial officer of the bank, had told analysts on Saturday.
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“We have several action plans from strengthening of the disaster recovery or the recovery point and the recovery time … and cloud strategy. There are several strategies that we have,” he said, according to a transcript of the call available on Bloomberg.
HDFC Bank was ordered to halt its digital banking initiatives and freeze credit card issuances until it addresses the lapses that led to a series of glitches. The lender’s e-banking service has faced three outages since 2018, inconveniencing customers. Days after the order, RBI governor Shaktikanta Das hinted that it does not take customer inconvenience lightly and urged financial institutions to spend more on information technology (IT) infrastructure.
“We want to mention that progress is being made on the plan of action provided to the regulator. We have taken it positively as it will raise the standard. The regulator will institute a process to (review the) action plan and the progress,” he said.
Vaidyanathan said that beyond the timeline of 10-12 weeks, it will depend on the central bank to review and decide on lifting the restrictions imposed last month.
“We will leave it to the regulator to handle it in the form of further inspection, as I mentioned in my initial remarks, where they can inspect and institute the process… That is not something that we can manage or we can tell you,” he said.
The management also said that the bank has added 2 million new liability relationships in the quarter. This comes at a time when it is unable to issue new credit cards because of the RBI order.
“The bank has continued its strength on liabilities side, with the addition of 2 million new liability relationships in the quarter. The management indicated that it has several intervention options to improve engagement and enhance the wallet share of customers,” Kotak Institutional Equities said in a report on Monday.
HDFC Bank had on Saturday reported a 18% year-on-year (y-o-y) rise in net profit to Rs8,758.29 crore for the three months to December because of higher net interest income and other income. Its profit was higher than the Rs7,818 crore estimated by a Bloomberg poll of 15 analysts.
However, its non-banking financial subsidiary HDB Financial Services reported a net loss of Rs44.3 crore in Q3 FY21 because of higher provisions. It had reported a net profit of Rs216.7 crore in Q3 of FY20. Provisions and contingencies at the non-banking financial company for the quarter were at Rs818.8 crore, while its operating profit was at Rs748.7 crore in the December quarter.