In a partial relief to HDFC Bank – the largest private sector bank of the country – the Reserve Bank of India (RBI) has allowed the lender to issue new credit cards, sources in the bank said.
In December last year, the banking regulator directed HDFC Bank not to issue new credit cards and to halt all launches of its digital business generating activities under its programme Digital 2.0. The RBI’s decision to impose the restrictions on HDFC Bank came after several instances of outages in the bank’s mobile banking app and internet banking platform.
“The restrictions that were there on issuing new cards have been discontinued and the RBI has now permitted the bank to undertake sourcing of new credit cards,” said a source adding the other restrictions will continue.
The ban on card issuance hit HDFC Bank hard as its total card base fell from 15.38 million in December to 14.82 million in June.
HDFC Bank is by far the largest credit card issuer of the country, and remains so even after the ban. The ban resulted in the lender losing market share in a rapidly growing market as some of its competitors upped the ante.
In a media interaction in June, Parag Rao, the bank’s country head of the payments business and in charge of technology transformation, had indicated the bank has prepared an aggressive plan to come back in the credit card business with a ‘bang’ once the embargo is lifted. “We are going to get back in the market with increased rigour,” Rao had said. HDFC Bank had been sourcing liability customers aggressively over the past few months, to whom credit cards can be offered once the ban is lifted.
While enforcing the ban, the banking regulator said the restriction will only be lifted satisfactory compliance with the major critical observations as identified by RBI. Following the ban, HDFC Bank had submitted a plan focusing on the immediate, short term, mid-term and long term to the regulator a couple of months back.
“We will work with the experts and the regulator to fortify the identified areas for improvement. Internally, we are looking at this as an opportunity to further improve ourselves and emerge stronger,” Sashi Jagdishan, MD and CEO of HDFC Bank had said after the ban was imposed in December 2020.
HDFC Bank has been making a lot of changes to its technology infrastructure post the outages it faced over the years. The bank is making large scale investments in the technology infrastructure, bringing new talent, getting into cloud-native stacks, a shift from the traditional monolithic IT infrastructures, and working with strategic partners for better products and services.