In a partial relief to HDFC Bank, the largest private sector bank of the country, the Reserve Bank of India (RBI) has allowed the lender to issue new credit cards, sources in the bank said. In December last year, the banking regulator had directed HDFC Bank not to issue new credit cards and halt all launches of its digital business-generating activities under its programme Digital 2.0.

 

 Reserve Bank of India said in a communication to the Bank on Tuesday, according to report by CNBC TV18. This means the India’s largest private sector lender will be able to offer credit cards from now.

 

“The bank is required to submit a board-approved letter of commitment towards continued compliance and also to achieve full compliance with the remaining observations of RBI’s IT examination report. The restrictions lifted as above is conditional upon abiding by the letter of commitment furnished to RBI,” the central bank further said.

 

In December last year, the banking regulator put temporary restrictions on the bank’s new digital banking launches under its programme Digital 2.0. It also directed the HDFC Bank not to issue new credit cards. A series of technical glitches in the bank’s mobile banking app and internet banking platform prompted the banking regulator to take this harsh step.

The ban on card issuance hit HDFC Bank hard as its card base fell from 15.38 million in December to 14.82 million in June.

In a media interaction in June, Parag Rao, the bank’s country head of the payments business and in charge of technology transformation, had indicated the bank had prepared an aggressive plan to come back to the credit card business with a “bang” once the embargo was lifted.

 

“We are going to get back in the market with increased rigour,” Rao had said. HDFC Bank has been sourcing liability customers aggressively over the past few months, to whom credit cards can be offered once the ban is lifted.

While enforcing the ban, the regulator said the restriction would be lifted only after the bank’s compliance with major critical areas identified by the RBI. Following the ban, HDFC Bank had submitted a plan focusing on the immediate situation, short term, mid term, and long term to the regulator a couple of months ago.