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Shares of HDFC Bank rise to a 2-week high after the RBI lifted the digital ban


HDFC Bank shares rise to 2-week high after RBI lifts digital ban: report

BENGALURU:

Shares of HDFC Bank rose nearly 3 per cent to a two-week high on Monday after the Reserve Bank of India (RBI) lifted restrictions imposed on the company’s digital operations.

“The RBI has removed the March 11, 2022 letter from its restrictions on business creation under the Bank’s Digital 2.0 program. Members of the Board of Directors have endorsed the said RBI letter,” the HDFC Bank said.

“We are fully committed to ensuring continued adherence to the highest standards of compliance with RBI recommendations,” the lender added.

In December 2020, the RBI banned HDFC Bank from launching new digital products or services and issuing new credit cards until the lender repeatedly resolved technology issues, citing disruptions to digital payment services.

Since then, the shares have performed poorly on a par with their peers and the wider market.

The RBI authorized the HDFC Bank to issue new credit cards in August 2021, but maintained restrictions on its digital presentation.

The digital ban has halted its ability to link banks to retailers and launch digital personal loan products, Macquarie Research said in a statement, Reuters said.

“The most important thing here is the RBI’s messages. With the ban lifted, the RBI is sending a signal that we are fine with the bank’s IT system and capabilities,” Macquarie said.

Nomura said that while new businesses under Digital 2.0 will not significantly contribute to revenue and profit growth in the coming quarters, the purchase of a digital share of customers and portfolio is expected to improve long-term profitability.

Shares of HDFC Bank rose 3 percent in 2021, below the 13.5 percent jump in the Nifty Bank index. Shares fell 5.6% this year at the close on Friday, compared to a 2.6% drop in bank indices as concerns over high inflation and the crisis in Ukraine hit investor sentiment.

“We have taken advantage of this time to make short-, medium- and long-term plans, respond to the evolving digital demand of our customers, and expand these initiatives in the coming days,” said HDFC Bank.

“We are pleased to once again be able to offer our customers a full range of our excellent services and continue to serve them with dedication and humility,” the lender added.



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