RBI Appoints External Auditor To Review HDFC Bank’s IT System

The Reserve Bank of India has appointed an external auditor to review HDFC Bank Ltd.'s IT system, a couple of months after the regulator penalised the private lender for repeated technical glitches in its internet banking services.

“The RBI has appointed an external professional IT firm for carrying out a special audit of the entire IT infrastructure of the bank under the Section 30 (1-B) of the Banking Regulation Act, 1949, at the cost of the bank under the Section 30 (1-C) of the act,” HDFC Bank said in an exchange filing.

The RBI, in December, had asked HDFC Bank to suspend launching any new digital banking products and sourcing new credit card customers following a series of outages over the last two years. In November, the bank had faced a power failure at its main data centre in Mumbai, which led to failed electronic transactions for customers.

Srinivasan Vaidyanathan, chief financial officer at HDFC Bank, in a call with analysts after the third-quarter results, had said the lender provided an action plan to fix its IT problems to the regulator and the RBI would conduct an audit to review the implementation of the plan.

The suspension of new launches and credit card issuance were serious penalties for a lender like HDFC Bank. The private bank is the largest credit card issuer in the country with 1.54 crore credit cards in force as of November. About 91.5% of the bank's total transactions were recorded on digital channels. In the months that have followed, HDFC Bank has been fixing the IT infrastructure that supports its digital banking offering.

Shares of HDFC Bank gained as much as 6.9% in early trade on Tuesday to an all-time high of Rs 1,578.5 apiece. That compares with a 1.98% gain in the Nifty 50.