Compliance with 85% of queries on Tech, RBI will take a call for lifting the ban on new credit card issuance: HDFC Bank
HDFC Bank has complied with 85 per cent of RBI’s requests on technology, and it is now in the regulator’s court to decide when to lift the ban on issuance of new credit cards, its managing director and chief executive officer Shashidhar Jagadishan said on Saturday.
Addressing shareholders at his first annual general meeting as executive head of the largest private sector lender, Jagadeesan said a technology audit has also been concluded and the RBI will now “independently” consider whether against the bank. When will the punitive action taken? .
Frustrated by repeated technical glitches at HDFC Bank, the RBI took an unprecedented action against the lender in December 2020, prohibiting issuance of any new credit cards, a clause in which it was a market leader, and called it It was preventing me from even starting any sort of thing. New digital offering.
“We have given the regulator a milestone of what we are doing on technology, following their advice and instructions. We have covered a very important part while speaking. About 85 percent of what we had to do has been covered,” Jagadeesan, who has been with the lender for over two decades and acted as a ‘change agent’ over the years that led to his promotion, said.
“The ball is in the regulator’s court. As they see fit, as they see that we are on the right track, I am sure at some point they will lift the ban,” he said.
Acknowledging that the bank has lost market share in the credit card segment due to the ban, Jagadeesan said the technical outage is a global phenomenon, but it is time to recover from a setback where the bank had made a mistake. “Rap on Grapes”. “From the regulator.
He said that over the past few months, the technology team has worked on this aspect of being able to implement disaster recovery on time and the confidence to respond to any situation is now very high.
The bank is working on a project to move all its back-end work to the cloud, but has to contend with legacy systems in the interim, he said, adding that there is a board committee looking into the IT aspect. is.
Jagadeesan expressed confidence that even if he has lost ground, it takes a lot of energy to “bounce back” as soon as the RBI penalty is lifted. Unless it gets the green signal from the RBI, the bank’s plate is full of work it has to do, focus on technology and improve customer service, he said.
He defended the bank’s record when it comes to technology investments, saying it is only because of the inflow of resources that it has been able to reduce its cost-to-income ratio from 49 per cent to 38 per cent compared to the previous six. is enabled. years.
The fear of being disrupted by agile fintech firms is very real and the bank has decided to be like them to stay relevant, he said, adding that it has moved all its processes to the cloud and in the next three years, the journey will be over.
On the question of fixing the responsibility, Jagadeesan said that the board and the management have decided to take action against those who have erred not only on the technology front but also on other issues, due to which the bank has suffered in the last two years. I faced chills.
HDFC Bank was earlier this year asked by the RBI to pay a penalty of Rs 10 crore for deficiencies in the auto loan vertical, where GSP units were bundled with loan sales. Jagdishan also said that all inspections in the bank are taken very seriously and assured that such cases will come down with time.
To a question on the impact of the MasterCard ban, Jagadeesan acknowledged that the US card issuer was an important partner for the bank, but added that it also has ties with rivals Visa and RuPay, which have been re-allowed to issue issuances. After getting it, it will be taken advantage of. leaves.
Jagdishan said it is too early to talk about selling stake in its brokerage business HDFC Securities, but the company is working on its own discount broking offering to gain market share.
He also said that HDB Financial Services has suffered due to the impact of the pandemic on its target demographic, leading to what researchers call a 4-5-fold increase in stress levels. He said that the company will bounce back once the pandemic is over and economic activities resume.
He added that in the medium term, HDFC Bank may ‘explore’ the price of HDB Financial Services and then consider listing after the company rebounds. Jagadeesan said the bank got only 40 days of work in the first quarter, and expressed satisfaction at the 14 per cent increase in profit that it has been able to deliver.
He said more than 17 per cent of its 1.2 lakh workforce had been infected with the virus and it had lost many people, including some youth. He said that adequate help was being provided to the kin of the deceased, including providing jobs.
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