Mumbai: HDFC Bank has indicated in its conference call with analysts that the lender might not complete fixing its back-end IT issues during the current fiscal. The bank said that its action plan relating to disaster recovery would take 12-18 months, while its immediate plans would take 10-12 weeks.
The country’s largest private bank had reported its Q3 results on Saturday — the first after the RBI pulled up the lender for repeated problems faced by customers in accessing digital banking. The bank had reported an 18% year-on-year growth in earnings. The bank’s share price rose by over 1% after the results on a day the sensex fell by nearly 1% after its record profit of Rs 8,758 crore.
According to Macquarie research analyst Suresh Ganapathy, the tech resolution will take time and could spill over to end of June 2021. “They want to be very sure everything is in place, ramp up capacity and then call the RBI for due diligence… As of now, inability to give credit cards has not affected account openings … But if this continues beyond June, we can see some impact coming in the near term… Meanwhile, for others like ICICI and Axis, this is an opportunity to ramp up their credit card base,” said Ganapathy.
The RBI has barred the bank from launching digital initiatives and issuing credit cards until it fixes issues with its IT system and ensures that multiple outages of online services that happened in the past do not repeat. According to analysts, though it would take time to fix the issues, the bank was optimistic of getting permission from the RBI for a digital lending platform for auto loans.
According to Siji Philip of Axis Securities, the bank has made a representation to the regulator for digital lending for four-wheelers and two-wheeler loans. “On the restrictions imposed by the RBI on December 2, the bank has made progress according to the plan provided to the regulator. The bank expects to complete the process in 10–12 weeks, which will then be subject to RBI inspection,” a note by Edelweiss said. It added that the bank aims to introduce a digital platform for auto loans in 90 days.
ICICI Securities said that the bank’s credit card portfolio was up 9% quarter-on-quarter despite the ban on acquiring new customers coming into effect from mid-December.