RBI partially lifts ban on HDFC Bank, allows issuance of new credit cards

Although the ban on introducing new digital initiatives remains, the bank shares gains after the partial lift

RBI partially lifts ban on HDFC Bank, allows issuance of new credit cards

Shares of HDFC Bank moved up by around 2 percent on Wednesday on the BSE in intra-day trade after the Reserve Bank of India (RBI) decided to lift the ban on issuing new credit cards partially.

On Tuesday, the central bank allowed the private lender to give credit cards while maintaining its ban on introducing new digital services.

RBI prohibited the HDFC Bank from initiating any new digital banking services and issuing new credit cards on December 2 until the many glitches in its mobile and internet banking systems are not addressed. The multiple glitches are said to have been there for the previous two years.


The opportunity was grabbed by the bank’s rivals ICICI Bank and SBI Cards, as they sought the occasion to bridge the gap with the HDFC Bank ban.

The existing users of the private bank were not affected by the sudden ban as 1.48 crore credit card users were recorded as of June this year.

After repeated tech outages at the bank’s online banking site and application, the decision to curb the operations, forcing RBI to ban it from launching any new technology initiatives.

The analysts at the brokerage firm, Motilal Oswal Securities, said the bank has underperformed and has been range-bound since the last few months due to pressure on NII growth and margins.

“The lifting of these RBI restrictions thus addresses the key overhang. Further, we also expect growth trends to revive in retail, especially in the unsecured lending segment in the coming quarters.

Overall, the bank continues to make additional contingent provisions further to strengthen its balance sheet against any potential COVID-19 impact and thus expects stress formation to remain under control,” the firm said.

The New Indian Express

The Chief Executive and Managing Director of the bank, Sashidhar Jagdishan, said the bank has abided by almost 85 percent of the central bank’s listed requirements on the technical improvements.

He further said that the “ball is now in the regulator’s court” to re-authorize the bank to issue cards and lift the curb.

“The RBI vide its letter dated August 17, 2021, has relaxed the restriction placed on sourcing of new credit cards.

The Board of Directors of the Bank has taken note of the said RBI letter,” HDFC Bank said in an exchange filing today.

In its statement, the bank further said that the limitation on all the Digital Business launches was mapped out for the Digital 2.0, until any further notification by RBI.

“We will continue to engage with RBI and ensure compliance on all parameters,” the bank added.

The bank’s share saw a 30-share Sensex index boost, with the Sensex touching a lifetime-high of 56,044 (0.40 percent increase). The Nifty 50 index also saw a 0.40 percent increase, marking a record high of 16,681.35. 


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