HDFC Bank trying to recover ₹100 crore funds transferred in glitch

In May, a few HDFC Bank account holders in Chennai became crorepatis when due to technical glitch their bank balance suddenly multiplied by a couple lakhs, and in some cases crores.

The bank attributed the error to a technical malfunction which was the fallout  of introducing a software patch as part of maintenance. But the bank had clarified at that time that the issue was confined to only a few accounts in certain HDFC branches in Chennai.

India’s largest private bank, which has deposits of ₹15.6 trillion as of March 31, swiftly froze the accounts that reported the huge balance fearing that the money would be transferred. A month later, the bank is trying to recover around ₹100 crore from nearly 4,468 customer accounts in which money had been transferred to at that time.

According to a report in LiveMint quoting sources, around ₹1,000 crore had been mistakenly transferred to these accounts. The report said that by the time the bank had tried to reverse the credit, around 4,515 customer accounts had already withdrawn around ₹126 crore.

Also read: HDFC hikes lending rate by 30 bps; loans to become dearer

News reports had quoted customers at that time revealing that suddenly they found money ranging from ₹3.1 crores to ₹13 crores in their bank accounts. But within 10 minutes, they had been unable to access their account, and after a few hours everything returned to normal and the money was no longer in their accounts.

In a statement on June 24, the HDFC bank spokesperson reportedly said that the issue of the said money transfer had been almost completely resolved. “To put matters in context, a display error was noticed in balances of a few customer accounts post a system patch upgrade on the night of May 28/ early morning of May 29, 2022. This caused some customers of the Bank to note an erroneous balance in their account. Post the proactive detection by the Bank, the issue was remediated for all these accounts. These customers can now operate their accounts for which they are intended.”

This major slip-up comes in the wake of an RBI order in December 2020, when the central bank directed HDFC Bank to temporarily halt all digital launches as well as new sourcing of credit card customers, following various outages the bank faced due to technical glitches in the past two years. The RBI’s directive came after the bank’s customers faced a number of incidents of outages in internet banking, mobile banking, and payment utilities of the bank over the past two years.

The card restrictions were however lifted in August last year, while the digital curbs were withdrawn in March.

The situation also led HDFC Bank MD and CEO Sashi Jagdishan to apologise to the bank’s stakeholders and customers, in a note in the bank’s annual report for 2020-21, “In the last couple of years our technological capability has been questioned, justifiably,” he said.

Also read: HDFC raises lending rate by 5 basis points; EMI to rise for existing borrower

Offering a detailed apology on the recent outages, Jagdishan said, “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.”

HDFC Bank, however, seems to be reportedly still trying to recover around ₹26 crore from 47 customer accounts through recall of fund transfer for those who used electronic means such as National Electronic Funds Transfer (NEFT), real-time gross settlement (RTGS) and Immediate Payment Service (IMPS) to transfer that money, said the report.

And, there is still an amount of ₹100 crore, which is to be recovered. Some of the customers have told the bank that they have already spent that money.

Other options explored by HDFC Bank is to locate the money spent through Unified Payments Interface (UPI) transactions at merchant establishments; to contact the bank that the money was transferred to via third party transfers and reverse the amounts and to recover the transferred amount parked in fixed deposits with HDFC bank. A majority of the accounts were from Chennai but it is alleged that there have also been instances from other parts of the country.