The RBI is attributing its shift in stance to the lender’s “overwhelming presence’’ in the digital banking and credit card space.
Das did not want to spell out if such unprecedented penalty measures would become a norm for outages from now on. “Whether it would be the same monetary penalty or it's a supervisory action, would depend on case to case…. And, it will not be proper for me to discuss individual cases,” Das said in an online briefing.
“In the case of the HDFC Bank, there were earlier episodes also. And, HDFC Bank
has an overwhelming presence in the digital payment segment in internet banking. We have some concerns about certain deficiencies (in the bank). And therefore, we felt that it is required and it is necessary that HDFC Bank strengthens its safety and the IT systems before expanding further,’’ the RBI governor said. He added that he was "quite sure and optimistic that the HDFC Bank management will comply with the direction.”
“If you want to remain competitive in the coming years, technology is key, robustness of your IT system is key. So, banks, NBFCs and other financial entities need to invest more in their IT systems, need to invest more in technology and strengthen all their systems so that public confidence is maintained.”
The RBI action came after bank customers faced numerous incidents of outages in internet banking, mobile banking, and payment utilities over the past two years. For instance, on November 21, outages in its internet banking and payment system due to a power failure in the primary data center had adversely affected users. The RBI is also checking why State Bank of India’s YONO application went down. But there’s no clarity yet on whether there would be action against the state-owned lender.
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