HDFC Bank Shares Fall Over 2% After RBI Asks Firm to Halt Launch of New Digital Initiatives

Shares of HDFC Bank declined over 2 per cent on Thursday after the company said the Reserve Bank of India has asked it to temporarily stop all launches of its upcoming banking initiatives and issuing of new credit cards. Erasing all its early gains, the stock dipped 2.13 per cent to close at Rs 1,377.05 on the BSE. During the day, it declined 2.32 per cent to Rs 1,374.25.

On the National Stock Exchange (NSE), it was down 1.84 per cent to close at Rs 1,381. The company’s market valuation was wiped out by Rs 16,055.99 crore to Rs 7,58,287.01 crore on the BSE.

In traded volume terms, 7.36 lakh shares were traded on the BSE and over 1.89 crore shares on the NSE during the day. In an unprecedented move, the Reserve Bank of India (RBI) has temporarily barred HDFC Bank from launching digital banking initiatives and issuing new credit cards after taking a serious view of service outages at the country’s largest private sector lender over the past two years.

The RBI’s order came on Wednesday, days after the last instance of service outage across its digital banking channels, including internet banking, mobile banking and other payments. The outage, which happened on November 21, severely inconvenienced customers, the bank informed the exchanges on Thursday. In December 2018, the bank’s new mobile application crashed within hours of its launch in what was attributed to the inability of the servers to handle the heightened traffic. Exactly a year later, its online channels were down during the salary time. After the second incident, the RBI had said it was looking into the glitches.

Usually, the RBI slaps monetary penalties on erring entities that comes under its regulatory framework. On Thursday, HDFC Bank said the latest incident on November 21 was a result of a power failure in its primary data center.

“The RBI has advised the bank to temporarily stop all launches of the digital business-generating activities planned under its programme, Digital 2.0 (to be launched) and other proposed business-generating IT applications, and sourcing of new credit card customers,” the bank informed the stock exchanges in a filing.

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