Specialist in Indian Banking and Economic Research

Hemindra Hazari

Is a Securities & Exchange Board of India (SEBI) registered research analyst with over 25 years experience in the Indian capital markets with a specialization in banking and economy research and has managerial experience of establishing profitable equities business, leading and mentoring analysts.  He has worked with prominent foreign and domestic capital market firms such as UBS, Societe Generale, HSBC, ASK Raymond James  and Karvy Stock  Broking and is a regular guest on business media channels and is respected for his non-consensus view on stocks and the market.

HDFC Bank: Honey, I Shrunk the Chief Risk Officer

HDFC Bank and KMB Carefully Select Independent Directors - For Their Lack of Banking Knowledge

Deafening Silence from Media and Sell-Side on HDFC Bank’s ‘Processing Fee’ Scandal

HDFC Bank’s Digital Irresponsibility: RBI’s Novel Penalty Hits Where It Hurts

Time to Junk the Less Savoury Parts of the Legacy of HDFC Bank’s Iconic CEO

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

It was unfortunate that <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN) </a>decided to provide selective disclosure at a <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/bb1870e3-1806-443f-8dc0-c81358e0d28a.pdf" target="_blank" rel="noopener">conference call</a> hosted by Jefferies. Only 63 institutional investors participated on the evening of December 9, 2020, where the bank publicly disclosed what went wrong at its recent digital outages. More importantly, in the opinion of this analyst, it provided market sensitive information in the form of the time span it would take to rectify some of the information technology issues raised by the Reserve Bank of India (RBI).  The bank disclosed the conference audio link to the exchanges nearly 16 hours later (at the latter half of the trading day). Such sensitive information should have been disclosed via a specially arranged press conference followed by an analyst conference, instead of providing such information to an exclusive audience of 63 institutional investors. Pertinently, HDFC Bank’s share price on December 10 closed 1.5% lower than the previous day, as compared with a 0.4% fall in the Nifty-50. This analyst understands that in future the Bank will disburse such information through a wider dissemination rather than such selective disclosure.At the conference call, the Bank acknowledged that its critical disaster recovery system required manual intervention to be activated, and that it would take 3 weeks for the automation to be implemented. This is a very important disclosure as this was not communicated to customers in its  <a href="https://v1.hdfcbank.com/htdocs/common/other/download/app1.html" target="_blank" rel="noopener">'Forget Cash...Go Digital'</a>  publicity campaign or in its ‘Digital 2.0’ strategy to stakeholders. It is disappointing that even though the RBI released guidelines for Business Continuity Planning (BCP) in <a href="https://www.rbi.org.in/SCRIPTs/BS_CircularIndexDisplay.aspx?Id=6366" target="_blank" rel="noopener">April 2011</a>, more than 9 years later, India’s most valuable bank, which markets its digital prowess, has been found to being so exposed and vulnerable at its backbone of banking operations.

It was unfortunate that HDFC Bank (HDFCB IN) decided to provide selective disclosure at a conference call hosted by Jefferies. Only 63 institutional investors participated on the evening of December 9, 2020, where the bank publicly disclosed what went wrong at its recent digital outages. More importantly, in the opinion of this analyst, it provided market sensitive information in the form of the time span it would take to rectify some of the information technology issues raised by the Reserve Bank of India (RBI).  The bank disclosed the conference audio link to the exchanges nearly 16 hours later (at the latter half of the trading day). Such sensitive information should have been disclosed via a specially arranged press conference followed by an analyst conference, instead of providing such information to an exclusive audience of 63 institutional investors. Pertinently, HDFC Bank’s share price on December 10 closed 1.5% lower than the previous day, as compared with a 0.4% fall in the Nifty-50. This analyst understands that in future the Bank will disburse such information through a wider dissemination rather than such selective disclosure.At the conference call, the Bank acknowledged that its critical disaster recovery system required manual intervention to be activated, and that it would take 3 weeks for the automation to be implemented. This is a very important disclosure as this was not communicated to customers in its  'Forget Cash...Go Digital'  publicity campaign or in its ‘Digital 2.0’ strategy to stakeholders. It is disappointing that even though the RBI released guidelines for Business Continuity Planning (BCP) in April 2011, more than 9 years later, India’s most valuable bank, which markets its digital prowess, has been found to being so exposed and vulnerable at its backbone of banking operations.

Selective Disclosure of Sensitive Information? HDFC Bank’s Conference Call on Its Digital Outages