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The third party independent audit of HDFC Bank’s IT infrastructure is in the final stages. The last outage in its net and mobile banking services on March 30 was not a capacity issue.
The bank is also working with existing customers in the face of the temporary ban in issuance of credit cards.
“The audit by the independent third party is in the final stages, and we will update further as we get to know more from the regulators,” said Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank in an analyst call after its fourth quarter results of the lender on April 17.
HDFC Bank is working on building capabilities in the area of core systems and is also working on migration to cloud for resiliency.
“We are also building new muscle and infusing new talent to execute these strategies and establish a digital factory,” he further said.
On the recent outage in its net and mobile banking services, he said it was “an intermittent issue on net and mobile banking that occurred due to a server hardware component failure, and has no correlation to any capacity issues”.
The Reserve Bank of India (RBI) had in February this year appointed an external IT firm for carrying out a special audit of the IT infrastructure of HDFC Bank, which has faced a number of outages in its digital banking services.
Concerned by the outages, the RBI had on December 2 last year also directed the lender to temporarily halt sourcing of new credit card customers as well as launches of digital business generating activities planned under its proposed programme ‐Digital 2.0.
Credit cards
On the credit card business, Vaidyanathan said the bank is focussing on engaging with existing customers, whose cards are either dormant or inactive to “resuscitate” them.
“This way portfolio activations and card dynamics are up, improving portfolio quality and increasing downstream activity,” he said.
Despite the temporary halt, HDFC Bank’s credit card advances grew by 12.3 per cent to Rs 64,674 crore for the quarter ended March 31, 2021 as against Rs 57,575 crore in the fourth quarter of 2019-20.
The impact of the non-issuance of cards is on new employees in corporates, on boarding of new corporates, Vaidyanathan said, adding that this loss of new customers can normally be made up within a few quarters of stoppage being lifted. This is because the bank continues to source liability customers, who will be pre-approved. “About three-fourths of our sourcing comes from existing customers of the bank,” he said.
Interest on Interest provision
The lender has also kept aside Rs 500 crore for interest on interest provisions, which is being worked with Indian Banks’ Association to standardise the computation across the system.
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