Why did RBI direct HDFC bank to stop its Digital Launches?
The Reserve Bank of India recently asked the HDFC bank to temporarily stop all its launches under its Digital 2.0 programme.
Why did RBI take action against HDFC bank?
The RBI issued the order with regard to outrages against the bank. The order were issued with regard to incidents of outrages in mobile banking, internet banking and payment utilities of the bank in the past two years.
What is the issue?
The bank faced outrages all over the country due to a power failure that occurred in its primary data centre in November 2020. Also in December 2019, the bank faced hard criticisms when customers faced issues in paying loan EMIs and settling credit card bills.
What is Digital 2.0?
The Digital 2.0 is about reinterpreting digital platforms as one. Under the initiative, the bank had planned to engage customers through technology. Its main objective was to move the customers from a single transaction to meeting all financial needs such as insurance, trading, investment, etc.
It was the first bank in the country to come out with 10 second digital loan. It is the second largest bank in the country. It was working in new technologies such as Artificial Intelligence, Machine Learning, Robotic Process Automation and blockchain.
When will the imposed curbs be lifted?
According to the RBI order, the HDFC bank should fix its accountability. The curbs will be lifted after the RBI is satisfied over the compliance of the bank.
Banking Regulation Act
The RBI shall issue orders, notification and interfere in the functioning of any bank including public and private banks in the country according to Banking Regulation Act. The recent curbs have been imposed on HDFC based on this act. Thus, RBI acts as guardian of commercial banks in the country. The act provides extensive powers to the apex bank to control and supervise the banking system in the country.
Category: Economy & Banking Current Affairs