Reserve Bank of India Lifts Credit Card Ban on HDFC Bank
(Bloomberg) -- HDFC Bank Ltd. will roll out strategies to “come back with a bang” in credit cards after the Reserve Bank of India lifted an eight-month long ban, it said in a statement on Wednesday.
India’s largest private lender will also “continue to engage with RBI and ensure compliance on all parameters,” it said. The central bank’s ban on unveiling new digital products remains.
The stock gained as much as 3.4% intraday after the bank confirmed the easing of curbs in a stock exchange filing, before closing 0.1% down in line with the broader banking gauge.
The return to the credit card business is crucial for HDFC Bank, India’s top issuer, as the curbs caused it to lose out to rivals including State Bank of India, ICICI Bank Ltd. and Axis Bank Ltd. HDFC Bank’s credit card outstandings shrank by 6.5% in the June quarter from the previous three months, hurting its overall retail portfolio.
The country’s most valuable lender was penalized by the RBI for repeated online glitches that hurt its 50 million customers.
While recommending a ‘buy’ rating for HDFC Bank given its attractive valuation, Jefferies India analyst Prakhar Sharma wrote that the bank needs to enhance investment in its technology capacities and strengthen back-end monitoring. This will give the RBI greater comfort for lifting the remaining restrictions.
The bank has been in the process of setting up digital and enterprise units to strengthen its online infrastructure and handle a larger volume of transactions. In February, the banking regulator appointed an external audit firm to look into the recurring outages.
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