Money & Banking

MasterCard bar not to impact HDFC Bank

Our Bureau Mumbai | Updated on July 17, 2021

Sashidhar Jagdishan, Managing Director and CEO, HDFC Bank

The bank has open architecture for products including cards, says MD & CEO

The recent ban on MasterCard on acquiring new customers will not impact HDFC Bank as it has pacts with other payment platforms including Visa and RuPay. “Mastercard is a significant franchisee partner for the bank. But we patronise on open architecture for products including cards, insurance and mutual funds where we distribute products of a lot of other companies also,” said Sashidhar Jagdishan, Managing Director and CEO, HDFC Bank.

Responding to queries of shareholders at the bank’s Annual General Meeting on Saturday, Jagdishan said the bank has multiple franchisees for cards including Visa and RuPay. “The bank is protected in having a failover mechanism,” he said, adding that until the ban on MasterCard is lifted and as and when HDFC Bank’s embargo is lifted, the new cards can be on either of the other platforms.

The RBI on July 14 took supervisory action against MasterCard and barred it from acquiring new customers (debit, credit or prepaid) from July 22 for not complying with data localisation requirements.

Jagishan said the temporary embargo on the bank by the RBI on sourcing new customers for credit cards has impacted the run rate on acquisition of customers. The bank has also made a lot of progress in terms of complying with the regulatory directive and the technology audit is also over. Jagdishan said that as and when the RBI feels comfortable in lifting the ban, HDFC Bank will bounce back.

Internet outages

On outages in the bank’s internet and mobile banking services, Jagdishan said these happen globally as well. He, however, said the recovery time from the outage for the lender is longer.

“Recovery time is not the global average, it is beyond a threshold level where customers get impatient,” he said, adding that it was a valid reason why the regulator took action against the bank. The bank is working to minimise these issues, he said. On a query on monetisation of HDB Financial Services, he said there is no immediate plan to do so.

“The pandemic has had a huge impact on HDB Financial Services...We would like to wait... we may try to discover the price initially but in the medium term, we want to watch how it recovers and at that time think about listing it on the exchanges,” he said.

Chairman Atanu Chakraborty said the Enterprise Technology Factor and the Digital Factory that have been put in place will work as the core backbone.

The bank has also set up a new business segment of commercial for micro, small and medium enterprises and rural banking that will capture the next wave of growth, he said in his address to shareholders.

Published on July 17, 2021

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