HDFC Bank can issue credit cards – Times of India

MUMBAI: The Reserve Bank of India (RBI) has allowed HDFC Bank to issue credit cards to new customers in a partial rollback of the restrictions imposed by the central bank in December 2020. The ban on launch of new digital offerings will continue for now. The RBI has also asked the bank’s board to certify compliance of commitments made by HDFC Bank.
According to sources, the bank received the notice regarding the ban late on Tuesday and is expected to intimate the same to the bourses. Although the announcement came late for Indian markets, the HDFC Bank American depositary receipts (ADRs) were up by nearly 1% in the US stock exchanges at 9pm IST. The bank had earlier said that it was in a state of readiness to issue cards as soon as the ban was lifted.
The relaxation comes just in time for HDFC Bank as a large chunk of credit card spending happens during the festive season from September to December. Retailers also announce special offers during this period to boost sales. HDFC Bank had lost over 1% market share in business following the ban, but still accounts for nearly a fourth of credit card transactions. SBI Card, ICICI Bank and Axis bank had made headway in this period.

In an interaction with the media last month, Parag Rao, a senior executive at HDFC Bank, said that the bank largely issued cards to customers who had an account with it. As against five crore customers, the bank has issued 1.5 crore credit cards. He said that while the gap would remain because of the bank’s credit policy, there has been a big jump in the customer base, creating a pent-up demand.
The RBI had imposed a ban on HDFC Bank after repeated outages on its internet banking and mobile banking platforms. Since then, the bank informed shareholders that it has taken special initiatives for scaling up infrastructure, disaster recovery and enhancing security.
In his interaction, Rao said that the bank has used the period since the ban to reinforce salesforce and other channels. “We have used the time to de-bottleneck our processes, quicken our software updates, identify points of failures with partners and put a framework to replace systems before there are any issues.”
In addition to the immediate fixes under the short-term plan, the bank has also submitted to the RBI a medium-term plan where it will completely rework its digital platform that will enable the bank to manage future growth.