85% compliance with technology requirements, ball in RBI court for lifting ban on the sale of new credit cards: HDFC Bank
Bombay: HDFC Bank has complied with 85% of RBI’s requests for the technology, and the ball is now in the regulator’s court as to when to lift the ban on issuing new credit cards, its chief executive said on Saturday and general manager Sashidhar Jagdishan.
Speaking to shareholders at his first annual general meeting as chief executive of the largest private sector lender, Jagdishan said a technology audit has also been completed and the RBI will now rule “independently” on the when to lift the criminal measures taken against the bank. Frustrated by repeated technology blackouts at HDFC Bank, the RBI took unprecedented action against the lender in December 2020, blocking it from issuing any new credit cards, a segment in which it was a market leader, and also prohibiting it from introducing any new digital offer.
“We’ve given the regulator a big step forward in terms of what we’re doing on the technology, complying with their advice and guidance. We have covered a very important part as we speak. Almost 85% of what we had to do was covered, ”said Jagdsihan, who has worked for the lender for over two decades and has worked as a“ change agent ”in the years that led to its rise. “The ball is in the regulator’s court. As they hear it, as they see that we are on the right track, I am sure that at some point they will lift the embargo,” he added. .
Acknowledging that the bank has lost market share in the credit card segment due to the ban, Jagdishan said technology outages are a global phenomenon, but it takes time to recover from a setback. where the bank made a mistake, leading to the regulator’s “rap on the fingers.” He added that over the past few months, the tech team has been working on this aspect of the possibility of invoking disaster recovery at time and confidence to respond to all situations is now very high. The bank is working on a project to move all of its back-end work to the cloud, but has to deal with legacy systems in the meantime. he said, adding that a board committee was looking at the IT aspect.
Jagdishan exuded confidence that even though they have lost ground, there is a lot of energy to “bounce back” as soon as the RBI penalties are lifted. Until she gets the green light from the RBI, the bank’s plates are full of work it has to do focusing on technology and improving customer service, he added. . He defended the bank’s record on technology investments, saying that it was only through the flow of resources that it was able to reduce its cost of income ratio down to 38% from 49% over the course of the year. The fear of being disrupted by agile fintech companies is very real and the bank has decided to follow suit to stay relevant, he said, adding that he has started to put all of his processes in the cloud and over the next three years the journey will be over.
When asked about accountability, Jagdishan said the board and management decided to act against those who got it wrong not only technologically but also other issues that cause the company to go wrong. bank has been grappling with rap on the fingers for the past two years. HDFC Bank was ordered to pay a fine of ₹10 crore earlier this year by the RBI for deficiencies in the auto lending vertical where GSP units were bundled with loan sales.
Jagdishan also added that all oversights are taken very seriously by the bank and assured that such cases will decrease over time. When asked about the impact of the Mastercard ban, Jagdishan admitted that the U.S. card issuer is an important partner for the bank, but added that it also has relationships with rivals Visa and Rupay who will be exploited once it is again authorized to transmit. cards. It is premature to talk about divesting its stake in its brokerage business, HDFC Securities, but the company is working on its own discount brokerage offering to regain market share, Jagdishan said.
He also said that HDB Financial Services has suffered from the impact of the pandemic on its target demographic, which has led to what researchers are calling a 4 to 5-fold increase in stress levels. The business will rebound once the pandemic is over and economic activity resumes, he said. In the medium term, HDFC Bank may consider “discovering” the price of HDB Financial Services and then a listing once the company has rebounded, he said.
Jagdishan said the bank only got 40 days of work in the first quarter and said it was happy with the 14% profit growth it was able to generate. He said more than 17% of his 1.2 lakh workforce had been infected with the virus and that he had also lost many people, including young people. Adequate assistance is provided to relatives of the deceased, including offering them a job, he said.
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