The Reserve Bank of India (RBI) has appointed an external professional IT firm to carry out a special audit of the entire IT infrastructure of HDFC bank under Section 30 (1-B) of the Banking Regulation Act, 1949. The audit will be conducted at the cost of the bank under Section 30 (1-C) of the Banking Regulation Act, 1949. The name of the IT firm was not disclosed.
Note– This appointment is part of RBI’s check to examine whether the bank has improved its digital capabilities following recent issues.
i.HDFC bank had multiple outages in its internet banking/mobile banking/payment utilities over the past 2 years.
- It is to be recalled that the bank has been penalised for two major outages, one in November 2018 and the other in December 2019.
ii.Subsequent to this, RBI in December 2020 has asked the bank to temporarily stop the following:
- All launches under its Digital 2.0 initiative and other proposed business generating IT applications .
- Issuing new Credit Cards to customers.
Why RBI Halted Digital Banking?
More investment is required by all stakeholders for building robust IT platforms and technologies for operational purposes as well as for fortifying public confidence in digital banking, especially when the financial landscape is rapidly embracing new technologies.
iii.In order to address these issues, the bank has submitted a detailed plan of action to the RBI in January 2021. The action plan will be implemented in 10 to 12 weeks and further duration will depend on the RBI’s examination.
- On the basis of the satisfaction level, RBI will lift the ban.
Recent Initiative of RBI to Enhance Digitalisation:
i.RBI had made the Real Time Gross Settlement (RTGS) transaction available on a 24×7 basis from December 14, 2020.
ii.India with this new initiative became one of the few countries in the world to operate its RTGS system 24*7 throughout the year.
Recent Related News:
On January 19, 2021, the Reserve Bank of India (RBI) released the 2020 list of Domestic Systemically Important Banks (D-SIBs) on the basis of data collected from banks as on March 31, 2020. As per the list SBI (State Bank of India), ICICI (Industrial Credit and Investment Corporation of India), and HDFC (Housing Development Finance Corporation Limited) continue to be D-SIBs or institutions which are ‘too big to fail (TBTF)’.
About HDFC Bank:
Incorporated– August 1994
Headquarters – Mumbai, Maharashtra
Managing Director(MD) and Chief Executive Officer(CEO)– Sashidhar Jagdishan(Succeeds Aditya Puri)
Tagline– We understand your world