HDFC Bank CEO Sashidhar Jagdishan says sorry to shareholders for tech glitches
"... we are certainly sorry for what has happened. And have taken this as an opportunity to improve and redouble our efforts to fix this problem"
In a letter addressed to shareholders in its annual report, HDFC Bank MD & CEO Sashidhar Jagdishan apologised for the technical glitches that have resulted in the RBI freezing issue of new credit cards and putting on hold its digital strategy.
“As a Bank we are certainly sorry for what has happened. And have taken this as an opportunity to improve and redouble our efforts to fix this problem for good. We have now embarked on a scale changing technology adoption and transformation agenda to help drive our ambitious future growth plans,” Jagdishan said in the letter dated June 22.
Jagdishan also admitted that technology is the key are that the bank needs to improve upon. “… it continues to remain both a strength as well as an area for improvement. In the last couple of years our technological capability has been questioned. Justifiably. But at the same time, we cannot afford to miss the big picture. We would not have become a Bank of this scale, size, and grown market share consistently year after year, without having a strong technology backbone.”
The technology problems as well as the compliance issues have led to regulatory actions, the MD & CEO of the country’s largest private sector lender said. Jagdishan also acknowledged that the bank had been penalised for the arrangement that it had with a vendor for distributing GPS devices with auto loans.
“There has also been some discussion around the deficiencies in compliance regarding the selling of GPS products. In November 2019, a whistle blower alleged that the vendor was incentivising some of the employees in the auto loan team to bundle these products with our car loans. We immediately conducted an enquiry and basis the findings have taken necessary actions against the involved employees including termination of their services and also terminated the arrangement with the vendor. RBI in the meanwhile also issued a show cause notice in connection with the Bank’s arrangement with the vendor,” the letter said.
“… Subsequently we have been asked to pay a penalty of Rs 10 Crore and have also been instructed to repay the commission that we earned from this process back to customers. We accept this verdict and will comply with the directives,” it added.