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HDFC to re-start issuing credit cards as RBI lifts eight-month ban

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The Reserve Bank of India late on Tuesday night lifted an eight-month-long ban on HDFC Bank from issuing new credit cards. The central bank’s decision would come as a shot in the arm for India’s largest private sector bank which has also decided to significantly strengthen its technology infrastructure to handle any potential load it may experience in the coming 3-5 years. 

The bank said it will start issuing new credit cards “in the coming time”.

“We would like to inform all that the Reserve Bank of India has lifted the restriction placed on sourcing of new credit cards. We thank the regulator for this. The board has taken note of the same and the bank is committed to full compliance of the regulatory directions,” HDFC Bank said in a statement on Wednesday. 

The lifting of this restriction would give a significant boost to HDFC Bank, which also happens to be the biggest credit card issuer in the country. However, due to the ban on onboarding new credit card customers, the bank had ceded ground as its outstanding credit cards dropped from 15.4 million in November 2020 to 14.8 million in June 2021, as per RBI data.

It is worth noting that while the ban on issuing new credit cards has been lifted, the restriction on the bank from launching any digital business generating activities under the bank’s Digital 2.0 programme continues. 

“The restrictions on all new launches of the Digital Business generating activities planned under Digital 2.0 will continue till further review by the regulator. We will continue to engage with the regulator and ensure compliance on all parameters,” HDFC Bank said.

What was RBI’s ban on HDFC Bank about? 

On December 2, 2020, the banking regulator, in a rather unprecedented move, had passed a few strictures directing HDFC Bank to stop all launches of digital business generating activities under its Digital 2.0 programme and onboarding any new credit card customers.

The ban was placed after the bank experienced several incidents of outages in its internet banking, mobile banking and online payment utilities over the last two years. 

Then, in November 2020, the bank’s entire internet banking and payment system went down owing to a power failure in its primary data centre. This was the final nail in the coffin which led the regulator to place a temporary ban on HDFC Bank’s digital initiatives. 

RBI’s tough stance on Mastercard 

Meanwhile, the regulator has also banned Mastercard from onboarding new customers in India over its failure to comply with the country’s data localisation norms. 

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