RBI's third-party audit of IT system over; awaiting decision: HDFC Bank's Jagdishan

The third-party audit of HDFC Bank's IT system, ordered by the Reserve Bank of India, is over and the bank is now awaiting a decision from the central bank, HDFC Bank MD and CEO Sashidhar Jagdishan has said.

The largest private sector bank in the country has been plagued with digital outages for some time. After three instances of network outages, the RBI last year prohibited the bank from selling new cards, and also asked the lender to improve its systems before the curbs are lifted.

"The last technology downtime led to the Reserve Bank of India banning us from issuing new credit cards as well as putting on hold new launches under Digital 2.0 initiative. Further, the regulator also appointed a third party audit of our IT systems. This audit is now over and the report has been submitted to the regulator. We now await the decision from RBI," Jagdishan said in the bank's annual report for 2020-21.

He said technology continues to remain an area of strength for the bank, but also has room for improvement. While HDFC Bank's technological capability has been "justifiably" questioned in the last two years, Jagdishan said, the bank would not have attained the scale, size and growth in market share without a strong technology backbone.

"In the last 28 months, we have, however, been in the spotlight for the wrong reasons when it comes to technology. Also, there have been deficiencies in compliance...As a Bank we are certainly sorry for what has happened. And have taken this as an opportunity to improve and redouble our efforts to fix this problem for good," he said.

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Jagdishan said the bank has embarked on a scale changing technology adoption and transformation agenda to help drive its future growth plans.

"We have invested heavily in the scale up of our infrastructure to handle any potential load for the next 3/5 years. We are also in the process of accelerating our cloud strategy to be on the cutting edge leveraging best-in-class cloud service providers," he said.

The bank has also strengthened monitoring process for its data centre (DC) and has shifted key applications to a new DC, including key consumer facing ones. Besides, Jagdishan said HDFC Bank has strengthened Disaster Recovery trials and processes so as to bounce back to serve customers faster and quicker.

He said the bank has also enhanced its security network and has put in place an enhanced application monitoring mechanism to always keep its IT systems on.

"While we execute this technology transformation agenda, there will sometimes be pain and outages beyond our control. But this is the bitter pill we need to swallow," he said, adding that the measures being put in place will ensure that downtimes will not be prolonged.

On the RBI's penalty of Rs 10 crore on the bank for deficiencies in regulatory compliances with regard to its auto loan portfolio, Jagdishan said, "We accept this verdict and will comply with the directives."

HDFC Bank had reported an increase of 18.5 per cent in its net profit for financial year 2020-21 at Rs 31,116.5 crore.

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