HDFC faces external tech audit

Bloomberg

India’s banking regulator has appointed an external firm to audit the technology infrastructure of the country’s biggest private-sector bank, a rare move that follows a penalty for repeated outages.
HDFC Bank Ltd. will “extend its cooperation” to the auditor, the Mumbai-based lender said in an exchange filing on Tuesday. The bank will pay for the audit, it said.
The Reserve Bank of India’s decision comes two months after it ordered HDFC Bank to curb some digital and credit card offerings following a series of glitches. At the time, CEO Sashidhar Jagdishan said the lender was working on a “war footing” to strengthen its digital capabilities.
“This is a very rare step by RBI and sets a precedent to HDFC Bank as well as other banks to fix their digital platforms,” said Gaurang Shah, vice president at Geojit Financial Services Ltd.
Investors shrugged off news amid a rally in Indian bank stocks, a day after government announced plans to support lenders laden with bad debts. HDFC Bank climbed as much as 6.9%.
The Mumbai-based lender last month posted third-quarter earnings that beat analysts’ expectations.
“The bank has said they want to resolve the issue,” Shah said. “I would recommend you to buy HDFC Bank.”