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HDFC Bank continues to face problems; RBI now appoints an external auditor to review India’s largest private lender

HDFC Bank has been receiving some flak from its customers over repeated technical glitches in both its Internet Banking and ATM systems for almost two years now.

In the latest, the RBI has appointed an external auditor to review India’s largest private lender HDFC Banks IT system.

The trouble with HDFC banking systems started sometime in 2019 when some of the customers of the bank could not access net banking services and were faced with error messages if they attempted any online transactions.


The bank had then accorded the problem to “technical glitches” and that it was looking to resolve the issue “on priority.”

However, it seems that HDFC has been unable to resolve these “technical glitches” as the customers continue to face problems with its online transactions and unable to withdraw money from ATMs.

The central bank had also penalized the bank two months ago for repeated technical glitches in its internet banking and ATM services; HDFC had also stated that it had provided the RBI with a plan to fix these issues.

HDFC Banks recurrent issues

HDFC bank has had repeated failures with regard to its digital services. The bank customers have been continuously complaining of their inability to conduct any transactions – credit and debit card, internet banking, UPI, IMPS, and other payment modes.

It is highly unsatisfactory for a Tier I bank’s customers to be facing such issues for almost two years now, as technology is the core to banking in the present, any problems with technology at its core will lead to not only a fall in the brand value but also loss of revenue.

HDFC Bank is one of India’s largest private banks; it holds almost 9 Lakh crore in deposits.
It is also one of the largest providers of salary accounts, and nearly 92% of the transactions initiated by tits customers fall in the internet and mobile services category, and only 4% of transactions are through its branch networks.

So one can only fathom the difficulties being faced by the customers of HDFC.

  • Oct 2019
    Customers of the bank were unable to log into the net banking facility
  • Dec 2019
    Customers of HDFC were unable to pay their EMI’s or Credit Card bills on time
  • 21 November 2020
    HDFC’s entire payment stack went down on 21 st November 2020, and the customers were left high and dry when all modes of payments went kaput.

However, the next day, HDFC informed that it had restored all services and said that an unexpected outage at one of the data centers had led to transaction failures.

RBI Action

In December, the outage led the RBI to acknowledge that the regulator had taken cognizance of the issues and had deployed a team of experts to “investigate the matter.” However, it had not named HDFC outrightly.

When a similar issue was reported in November 2020, the RBI had then sought an explanation from the bank.

In the current, the RBI has now appointed an external professional IT firm for carrying out a special audit. The audit will consider the bank’s entire IT infrastructure under Section 30 (1-B) of the Banking Regulation Act, 1949; this audit is at the bank’s cost under Section 30 (1-C) of the act.

In December, the RBI had also asked for HDFC to suspend launching any new digital banking products. It had also asked the bank not to source new credit card customers, this following the outages in the last two years.

A Heavy Blow to HDFC

HDFC is one of the largest credit card issuers in the country, with an impressive 1.54 crore credit cards in force; hence the RBI’s directive to stop the issuance of new credit cards is a serious penalty levied on the bank.

The bank also has at least 91.5% of its total transactions on digital channels, which means it needs reliable tech support; thus, the RBI also mandated for the bank to halt any new digital banking services.

Sashidhar Jagdishan, HDFC Bank’s MD & CEO, in a letter to its customers, said the bank would work with the experts and regulators to resolve the issues and fortify identified areas that need improvement.

HDFC had presented a short term and a long term plan on architectural inefficiencies, cloud computing, and disaster recovery process.

The tech strengthening plan is pegged at three months, and the long term plan is pegged at 12 -18 months.

What could be the problem

The Banking Sector is a highly competitive space, with each bank fighting to take a share of the pie and to maintain a particular league in the banking space.

Hence, more often than not, the banks, to maintain their edge and bid to outperform the competition, often develop new products without proper testing.

However, according to experts, a decade-old infrastructure is not competent to manage 2.2 billion daily UPI transactions, the payment industry is not equipped to handle such massive volumes of transactions.

What does the future look like for HDFC?

In 2021 too HDFC’s banking system is hit by technical glitches and system malfunction due to unexpected loads.

The unresolved issues continue to hamper the customers who have been struggling with these problems for almost two years now.

Any further delay in resolving these issues could lead to a major migration on the part of the customers to other banks. They continue to lose faith in the bank; frequent outages would lead to dissatisfied customers, impede customer experience and hurt brand credibility.

The bank had new launches in the pipeline – a delay in the launch of its Digital 2.0 initiative under which the bank hoped to consolidate all digital transactions of a customer into one platform.
HDFC was also looking to launch its auto loan portal in the coming months.

Thus, unless HDFC can resolve the issues that seem to be plaguing its banking systems, it will face massive erosion in its customer base.

In today’s context, the need for an efficient banking system and ensured safety of each transaction are the most significant demands and criteria of every customer.

Hence, for HDFC to bounce back from its current inefficiencies, it would require it to speed up the process while maintaining maximum technology efficiency or set for loss.
The future of HDFC is grim if it is unable to reinvent itself.



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