HDFC Bank has informed that their analysts improving the architectural efficiency of its information technology systems would take 3 months while it would need 6 weeks to automate switchover to the disaster recovery system. This was in response to the Reserve Bank of India’s ordering a temporary stop on the launch of IT initiatives and on the issue of new credit cards until the bank fixes its information technology systems. The HDFC bank’s CFO has told that in an investor call with Jefferies that the 3 system outages suffered by HDFC Bank since November 2018 were disparate events that affected online banking which include mobile banking, net banking, and power-outage/ back-up at the data centre, respectively.
In a meeting, Jefferies said that the resolution will take some time that includes few weeks for strengthening the disaster recovery system followed by a review by the Reserve Bank of India, the HDFC bank’s internal committee, and independent-expert working on the problem and ensuring action, which in our view can take a month. The HDFC bank is expected to go ahead on merchant acquisition, which it is free to continue. HDFC bank’s Smart Hub 3.0 is a platform solution provide to merchants/retailers to help them manage supply chains and track and update their inventories and collect payments. The bank provides value-added services and will be using the pause to run analytics on its credit card portfolio to devise strategies for the business when the ban is lifted.
The HDFC bank has faced 3 system outages in about 2 years, the first one was in November 2018, the second one was in December 2019 and the third one was in November 2020, the banks’ management has indicated the events were not connected.
The Reserve Bank of India on November 19 has fined HDFC Bank Rs 10,00,000 for bouncing of subsidiary general ledger, which led to a shortage of balance in certain securities in the bank’s constituent subsidiary general ledger. A subsidiary general ledger is a Demat account for government bonds held by banks. A constituent subsidiary general ledger is opened by a bank to hold bonds on behalf of customers. The HDFC bank’s failure of a settlement of a bond transaction for want of securities in an account leads to a subsidiary general ledger bounce.
