Tag: sashidhar jagdishan

HDFC Bank to hold 2,000 workshops to prevent fin frauds, BFSI News, ET BFSI

Banking & Finance

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Mumbai, Nov 15 (PTI) Largest private sector lender HDFC bank on Monday said it will be organising 2,000 workshops over the next four months for preventing financial frauds. The campaign will tell the customers about ways to safeguard themselves against financial fraud, starting with not disclosing any information on banking details.

A special focus is being given to the youth segment, where the bank will be targeting Senior Secondary Schools and Colleges, so that the awareness is ingrained, as per an official statement.

“Digitalization offers customers unparalleled convenience and access to banking services. With these conveniences comes a lot of risks of cyber frauds as well. The fraudsters are constantly on the prowl looking out for gullible customers,” it’s managing director and chief executive Sashidhar Jagdishan said.

The second edition of the campaign titled ‘Mooh Band Rakho’ was launched by K. Rajeswara Rao, Special Secretary, NITI Aayog. Lt General Dr Rajesh Pant, National Cyber Security Co-ordinator, was also present.



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HDFC Bank sets ambitious target for card issuance, source says, BFSI News, ET BFSI

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India’s most valuable lender HDFC Bank has set out an ambitious plan to more than double monthly card issuance from September after the central bank lifted a temporary ban imposed on HDFC in December, according to a source.

“The sales teams have been asked to meet a target of issuing 500,000 cards a month starting September for the next few months,” said the source with direct knowledge of the matter.

HDFC Bank, which in September 2020 had issued nearly 200,000 cards, did not immediately respond to a request seeking comment.

The latest target is a big jump from a year ago but some analysts said it was achievable given the number of “liability” or savings accounts it has opened this year. Savings account holders are typically sold credit cards and loans by lenders.

“Having added close to 3.65 million liability accounts from Jan 2021 to June 2021, it can easily capture market share in the credit card space,” Macquarie said in a research note.

Earlier the bank said in a regulatory filing that India’s central bank had relaxed restrictions placed on it last year on issuing new credit cards, following outages in the bank’s digital payment services.

The relaxation was welcomed within the company.

“All the preparations and strategising that we have put in place to ‘come back with a bang’ (on credit cards) will now be rolled out,” HDFC Bank Chief Executive Sashidhar Jagdishan said in an internal email to employees, a copy of which was seen by Reuters.

“In the coming months, we will aggressively go to the market with not just our existing suite of credit cards but also new offerings in the form of co-brands and partnership,” Jagdishan said in the email.

With nearly 15 million credit cards in issue, HDFC Bank is the largest lender in the segment with nearly 24% market share. Yet over the last eight months peers such as ICICI Bank and SBI Cards have gained ground.

As of June, ICICI Bank had 11 million credit cards, up from about 10 million in January.

“Lifting of RBI (Reserve Bank of India) restrictions before the festive season augurs well and we expect HDFC bank to turn more aggressive on credit cards over the next few months,” brokerage Motilal Oswal said.

HDFC Bank is the seventh most valuable lender in Asia-Pacific with a market capitalisation of 8.37 trillion rupees ($112.7 billion).



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RBI partially lifts ban on HDFC Bank, allows it to sell new credit cards, BFSI News, ET BFSI

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Eight months after barring the country’s largest private sector lender HDFC Bank from selling new credit cards, the Reserve Bank of India (RBI) has lifted the ban.

However, the ban on launching new technology initiatives remains.

In December last year, the RBI had come out with an unprecedented action implementing both the bans, after repeated instances of technological outages at the lender, which is the market leader in the credit cards segment.

Rivals ICICI Bank and SBI Cards seized the opportunity to narrow the gap with HDFC Bank.

The bank’s existing users were not impacted by the ban and it had 1.48 crore credit card customers as of June.

The impact

On July 17, the bank’s Chief Executive and Managing Director Sashidhar Jagdishan had said it has complied with 85 per cent of the RBI’s requirements on the improvements desired, and the ball is now in the regulator’s court to re-allow the bank.

Earlier, its technology and credit card vertical had said the time off the market has been utilised to re-draw processes and the teams are raring to go.

Jagdishan had said a technology audit is also over and the RBI will now be “independently” taking a view on when to lift the penal actions taken against the bank.

“We have given a milestone to the regulator in terms of what are the things we are doing on technology, complying with their advisories and directives.

The progress

“We have covered a significant portion as we speak. Almost 85 per cent of what we had to do has been covered,” Jagdsihan, who has been with the lender for over two decades and worked as the ‘change agent’ in the years leading to his elevation, said.

He added that the ball is in the regulator’s court. “As they deem fit, as they see that we are on the right track, I am sure at some point of time, they will lift the embargo.”

Acknowledging that the bank has lost market share in the credit card segment due to the ban, Jagdsihan said tech outages are a global phenomenon but it is the time taken to recover from a setback where the bank erred, leading to the “rap on the knuckles” from the regulator.

The action against HDFC Bank has been followed with a ban on card companies Mastercard and American Express from selling any new cards because of a failure to adhere to data localisation rules.

Also read : HDFC Bank episode shows that digital banking is not easy



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MasterCard bar not to impact HDFC Bank

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The recent ban on MasterCard on acquiring new customers will not impact HDFC Bank as it has pacts with other payment platforms including Visa and RuPay. “Mastercard is a significant franchisee partner for the bank. But we patronise on open architecture for products including cards, insurance and mutual funds where we distribute products of a lot of other companies also,” said Sashidhar Jagdishan, Managing Director and CEO, HDFC Bank.

Responding to queries of shareholders at the bank’s Annual General Meeting on Saturday, Jagdishan said the bank has multiple franchisees for cards including Visa and RuPay. “The bank is protected in having a failover mechanism,” he said, adding that until the ban on MasterCard is lifted and as and when HDFC Bank’s embargo is lifted, the new cards can be on either of the other platforms.

The RBI on July 14 took supervisory action against MasterCard and barred it from acquiring new customers (debit, credit or prepaid) from July 22 for not complying with data localisation requirements.

Jagishan said the temporary embargo on the bank by the RBI on sourcing new customers for credit cards has impacted the run rate on acquisition of customers. The bank has also made a lot of progress in terms of complying with the regulatory directive and the technology audit is also over. Jagdishan said that as and when the RBI feels comfortable in lifting the ban, HDFC Bank will bounce back.

Internet outages

On outages in the bank’s internet and mobile banking services, Jagdishan said these happen globally as well. He, however, said the recovery time from the outage for the lender is longer.

“Recovery time is not the global average, it is beyond a threshold level where customers get impatient,” he said, adding that it was a valid reason why the regulator took action against the bank. The bank is working to minimise these issues, he said. On a query on monetisation of HDB Financial Services, he said there is no immediate plan to do so.

“The pandemic has had a huge impact on HDB Financial Services…We would like to wait… we may try to discover the price initially but in the medium term, we want to watch how it recovers and at that time think about listing it on the exchanges,” he said.

Chairman Atanu Chakraborty said the Enterprise Technology Factor and the Digital Factory that have been put in place will work as the core backbone.

The bank has also set up a new business segment of commercial for micro, small and medium enterprises and rural banking that will capture the next wave of growth, he said in his address to shareholders.

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Focus is to strengthen internal checks and balances: HDFC Bank MD & CEO

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Taking cognizance of the recent issue of mis-selling of GPS products along with car loans, HDFC Bank is working on more controls to ensure such problems do not recur.

“I am personally determined to fix this. At an organisational level there is a greater focus on the role of Credit, Risk, Compliance, Audit and other enabling functions so that our checks and balances get strengthened,” said Sashidhar Jagdishan, Managing Director and CEO, HDFC Bank.

In his message to shareholders in the bank’s Annual Report 2020-21, Jagdishan said the lender has over the last year put in place a systemic way of measuring customer experience by adopting the Net Promoter System. This would enable it to get customer feedback post transactions.

The Reserve Bank of India had on May 28 imposed a monetary penalty of ₹10 crore on the private sector lender.

HDFC Bank has also said it will be refunding the GPS device commission to auto loan customers who availed of the devices as a part of the auto loan funding during fiscal years 2013-14 to fiscal year 2019-20.

Jagdishan said that for many years the bank had been bundling the financing of GPS systems and cars. “The teams believed this was a routine lending activity. Also, a particular vendor had entered into an arrangement with us directly,” he said.

After the whistleblower complaint, the bank conducted an enquiry and basis the findings took necessary actions against the involved employees including termination of their services and also terminated the arrangement with the vendor.

“Reinforcing the three Cs: Culture, Conscience and Customers across the organisation is a clear focus area for both me and the Bank,” Jagdishan stressed.

Highlighting his other focus areas, he said HDFC Bank is working to augment its digital capacities post outages in its mobile and net banking services.

“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 the RBI,” he said.

Strategy

In terms of the expansion strategy, Jagdishan said the bank has created a new business segment of Commercial (MSME) and Rural Banking to capture the next wave of growth.

“We will continue to strengthen our leadership position in the payments business and retail assets business and have added Wealth Management and Private Banking as a core focus area for us,” he said, adding that it will also focus on the Corporate Cluster and Government Business to increase penetration.

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HDFC Bank sees stress emanating from loans restructured during Covid 1.0, BFSI News, ET BFSI

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HDFC Bank has warned of a rise in loan delinquencies as business and collection efficiencies have been hit by the Covid wave.

The second wave has accentuated problems for the people hit by the first wave and there will be stress emanating from borrowers who took the moratorium or restructuring, its chief executive Sashidhar Jagdishan said in an investor call.

“For the first time in as many years, we don’t have visibility on what is going to happen and, hence, near-term expectations are tepid,”Jagdishan said.

“There will be incremental slippages if this continues for a while longer.”The pace of vaccination is crucial for both clarity and visibility on likely delinquencies. he said.

He stressed that vaccinating more citizens, within the shortest period of time, was the only way of returning to normalcy.

“Unfortunately, the availability of vaccines is still a blind spot. A lot of people are struggling to get vaccinated, but as soon as this is smoothened, positivity should return to the future outlook,” he said. The bank has also asked its collection agents and door-to-door staff to function digitally.

Collections hit

“The impact of Covid 2.0 is much more than what we saw in the first wave, and the health of our staff is paramount,” he said. “So long as they are able to engage with customers digitally and secure business digitally, including collections, we will be alright.

Because we have also directed our collection agents not to step out, among the stressed borrowers we expect to see a higher amount of delinquency but these accounts should get resolved in the coming quarters.”

“As things stood in March, we would have had a very buoyant FY22, but as things stand now, our performance is on a best-effort basis,” he said. “But the platform is so good that we will be in a position to bounce back when things return to normalcy.”

Tech issues

Jagdishan also said the bank management was hard at work to solve the tech issues plaguing the lender in recent years. The bank faced three major digital outages in the last three years, prompting the central bank to direct curbs, including a standstill on launching new digital initiatives and onboarding credit card customers.

“A fair amount of work has happened though we still need some time before we can control the issues on resilience,” Jagdishan said. “We have done a fair amount of work on our IT systems, security, infrastructure, and our recovery timeline is something we are working on.

The strictures imposed by the RBI have given us a window to work faster. We are impacted, it is a blot on the bank that we are unable to source cards but I take this positively and build our technology that is better than that of anyone else in the system.”

HDFC Bank first saw a spurt in cheque bounce cases in April, coinciding with the second lethal Covid wave in the country.

Check bounce rates for HDFC Bank were improving up to March 2021. However, bounce rates increased in April, returning to January 2021 levels. Maharashtra, Madhya Pradesh, Punjab, and Telangana were seeing higher check bounce rates.



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HDFC Bank CEO outlines ‘Technology Transformation’ plan to fix digital glitches, BFSI News, ET BFSI

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HDFC, which has been hit by several digital glitches since the past year, has embarked on a scale changing technology adoption and transformation agenda to help drive its ambitious future growth plans.

“Our aim is to “Keep Systems ALWAYS ON. ALWAYS SECURE. AND PERFORM at SCALE”. While we execute this Technology Transformation agenda, there will sometimes be pain and outages beyond our control. We must doubly resolve to reach out proactively to our customers / stakeholders and explain the path that we are traversing to make their experience with us smoother, faster and better,” HDFC Bank CEO Sashi Jagdishan wrote in a letter to staff.

Some of the specific initiatives the bank has embarked under Technology Transformation Agenda, according to Jagdishan, include:

1. Infrastructure scalability: We have invested heavily in the scale up of our infrastructure to handle any potential load that we will encounter 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.

2. Disaster Recovery (DR) resiliency:

a. We have strengthened our process of monitoring our Data Centre (DC) and have shifted key applications to new DC.

b. DR switch over for Disaster recovery resiliency has been completed for key customer facing applications including automating DR switch over for key applications.

c. Enhanced monitoring capabilities have been put in place to manage our Data centre operations and Resiliency processes.

3. Security Enhancements: We have strengthened our firewalls further. We have to be scanning the horizon for potential security issues and be ever prepared to face them. We haven’t had any security issues in the past. But this is always an important area of focus and action plans are underway for further robustness.

4. Monitoring mechanisms. An enhanced application monitoring mechanism has been put in place across the board to enable us to keep our IT systems Always On.
Reasons for glitches

On technical issues, Jagdishan gave an elaborate reasoning for failures:

November 2018: Crash of the New Mobile Banking App.

Reason: We faced an unprecedented demand to download the new mobile app. We have learnt and since refined our processes of managing the mobile banking app and has never faced any such challenges later. After the Nov 2018 initial launch, we have upgraded our mobile app seven times over the last two years and in all these instances it has been a smooth affair with no downtime or customer inconvenience whatsoever.

December 2019: Outage with Mobile Banking App

Reason: All banking systems are complicated and interconnected and each component has to work efficiently for us to deliver our promise to our customers. In this instance, one of the vendors system upgrade patch issue was faulty and the same has been addressed adequately. We have and will continue to reinforce vendor patch application.

November 2020: Outage at Data centre

Reason: A third party human error lead to the downtime. To remove this risk completely, we have taken several actions to mitigate such instances in future.

March 1, 2021: Net Banking/Mobile Banking downtime

Reason: The issue here occurred on account a faulty signature on our HIPS (Host Intrusion prevention software). This was an issue acknowledged by the manufacturer which impacted several global clients as well. The faulty signature resulted in slowing down response on Net banking and mobile banking. This has, since, been rectified.

March 31, 2021: Net Banking/Mobile Banking downtime

Reason: The issue occurred on account of a hardware component failure in one of our database servers resulting in a slow response to some of our customers. A large number of our customers were able to carry out their NB/MB activities in this period and we saw only a marginal dip in the number of transactions that day.

“To put things in perspective, in the last 28 months, we have had 5 instances of downtime. Every instance has hardened our resolve to do better keeping our customers in mind,” Jagdishan said.

Advice to staff
Business objectives should be driven keeping in mind the 3Cs that I wrote about in my last communication to you. It is Culture, Conscience and Customers. Continue to keep the humility quotient (HQ) high and make it part of your DNA. I have committed myself to be part of the on-going cultural transformation and I urge each one of you to inculcate and espouse the same mantra down the line. The broad macro opportunities continue to present themselves across the retail, MSME and Corporate Banking for a Bank like us and across geographies’ like semi-urban and rural markets, he said.



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