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    ET in the classroom: How the RBI move on HDFC Bank affects customers

    Synopsis

    The Reserve Bank of India’s move to temporarily ban private lender HDFC Bank from onboarding new credit card clients and launching digital initiatives has led to a confusion among the customer’s minds on what services will be affected.

    HDFC BankReuters
    If you are an existing credit card user and your card expires, the bank will issue you a new card. If your card gets lost you will be issued a replacement.
    The Reserve Bank of India’s move to temporarily ban private lender HDFC Bank from onboarding new credit card clients and launching digital initiatives has led to a confusion among the customer’s minds on what services will be affected. In this latest edition of ET in the classroom, Saloni Shukla finds out how does the RBI diktat affect you, the customer.

    What has the RBI done?
    The Reserve Bank of India has asked HDFC Bank to temporarily stop all digital launches and sourcing new credit card customers. The RBI order also states that the lender’s board needs to examine these lapses and fix accountability.

    Why did the RBI do this?
    This unprecedented move by the RBI came after the bank suffered its third big outage in the span of just two years. The bank faced its first big outage in November 2018 while upgrading its mobile application and internet banking. A year later it faced its second outage in December 2019, forcing RBI to send its team to study the issues that the lender was facing. Another incident happened on November 21 due to a power outage in its Primary Data Centre, after which customers weren’t able to access digital offerings for 2 days.

    How does it affect you?
    The RBI move does not affect existing clients. You will be able to access your mobile or internet banking solutions. You will also be able to use your existing credit card, open bank accounts, borrow loans and conduct a variety of other banking transactions.

    What is allowed and not allowed?
    If you are an existing credit card user and your card expires, the bank will issue you a new card. If your card gets lost you will be issued a replacement. But, since the bank will have to stop sourcing new credit card customers, no new clients will be able to avail these services till the RBI lifts the ban.

    How does it disrupt HDFC Bank’s digital rollout?
    Some of the bank’s strategic digital initiatives to improve the front end digital experience, improve digital origination, straight through processing, next generation of mobile and internet banking, APIs based banking on the edge etc would now be readied and launched post the approval and clearance from regulator.


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