HDFC Bank to implement digital action plan in 10-12 weeks

HDFC Bank has envisaged two legs to its action plan for remedying its digital strategy on the Reserve Bank of India’s (RBI) directions. One of these is its cloud strategy, which involves a 12-18-month plan, and the other entails the implementation of other aspects of the plan over 10 to 12 weeks. Once the short-term plan is implemented, the bank expects the RBI to carry out an inspection, the management told analysts on Saturday.

The bank has thought of several action plans from the strengthening of the disaster recovery (DR) mechanism to cloud strategy. Srinivasan Vaidyanathan, chief financial officer, HDFC Bank, said that while the cloud strategy could take up to 18 months to implement, the other components of the action plans could take 10-12 weeks. “But then, from then on the further timeframe is not something that we manage, we will leave it to the regulator to handle in the form of further inspection, where they can inspect and institute the process how they will inspect and look at the action plans on the progress around it,” he added.

The bank said that it opened two million new accounts during the December quarter and the RBI directive to stop issuing new credit cards has not affected the bank’s deposit accretion. More than two-thirds of its credit card accounts come from its existing liability base. Vaidyanathan explained that a credit card becomes meaningful over a two-year period and in the meantime, the bank has to run programmes for activation and engagement. Once the bar on new credit cards is lifted, HDFC Bank expects to be able to crunch these timeframes through what it calls “intervention programmes”.

The lender also sought to assuage investor concerns by saying that its existing card base is generating strong returns. “Spends were up smartly, riding on the wave of enhanced customer engagement programs. Further opening up of markets post-lockdown, enhanced acceptance of electronic payment modes as an ecosystem trend and enhanced marketing spends by most luxury and high street consumption brands,” Vaidyanathan said.

Analysts have expressed satisfaction with the bank’s Q3 results and management commentary. Emkay Global Financial Services said in a post-results report that it expects HDFC Bank to ride the ensuing new growth wave, given its strong franchise and prospects of faster asset quality normalisation. The bank’s shares ended at Rs 1,483.20 on the BSE on Monday, 1.15% higher than their previous close.