MUMBAI (Reuters) – The central bank has forbidden India’s largest private lender HDFC Bank from adding new credit card customers or launching digital businesses after its digital payment services were hit by a power failure last month.
The Reserve Bank of India has asked the bank’s board to examine the lapses and fix accountability, the lender said in a stock exchange filing on Thursday.
It said the central bank would consider lifting the curbs on “satisfactory compliance with the major critical observations” it had made.
“We are working on war footing,” said Sashi Jagdishan, Managing Director & CEO of HDFC Bank in a statement to customers published on the bank’s website. “We will work with experts and the regulator to fortify the identified areas for improvement.”
On Nov. 21, HDFC Bank’s digital payments business went down for more than 12 hours following a power outage in its primary data center. The lender faced similar outages in Nov. 2018 and Dec. 2019.
Suresh Ganapathy, analyst at Macquarie Capital said in a note that the ban could be in place for around 3-6 months.
“The bank would at least take a quarter to resolve some of these issues and then invite RBI for a review.”
The bank’s shares closed down 2.1%, reversing a 1.8% gain made earlier in the session.
“The bank believes that these measures will not materially impact its overall business,” the lender said.
With nearly 15 million credit cards HDFC Bank has the country’s highest market share of about 26% and was set to roll out new digital offerings, which will be impacted by the RBI’s move.
Reporting by Nupur Anand; additional reporting by Chris Thomas; Editing by Clarence Fernandez, Kirsten Donovan