HDFC to allocate 6-7% of its budget for IT expenses

MUMBAI: HDFC Bank will allocate 6-7% of its expenditure to IT, covering both capital and operating expenses, Parag Rao, HDFC Bank’s head of payments and consumer finance, said.
Speaking at the launch of the bank’s digital card Pixel on a DIY platform, Rao said that a big chunk of the bank’s capital expenditure has already been incurred and that 6-7% of the budget for IT was a ‘good figure’ for a stable business.
HDFC Bank reported full-year operating expenses of over Rs 1.5 lakh crore – nearly three times the Rs 51,530 crore in the year-ago period due to the cost of the merger.
“We have been investing in various parts of the core infrastructure. We have been looking at the existing stacks and ‘hollowing the core’ to make them more resilient and modular. We have completed ‘sprinkler’ – our customer servicing application which allows the back-end to get a view of customer engagements across channels,” said Rao.
RBI has been pushing banks to spend more on IT, particularly in building capacity and resilience of systems in light of soaring transactions and to avoid downtime. The central bank had imposed restrictions on HDFC Bank’s digital initiatives in Dec 2020 after repeated outages. These were fully lifted only in March 2022. More recently, RBI placed restrictions on Kotak Bank following dissatisfaction with its IT systems.
Rao said that the Pixel card has been launched to acquire young customers who are joining the workforce. The card is offered in partnership with Visa and can be obtained instantly through the bank’s Payzapp app. Customers can opt for an additional physical card if they wish, but even without a card, transactions can be undertaken online or in stores using their phone’s contactless feature.
On RBI’s directive requiring banks to offer customers the choice of payment network, Rao said that HDFC Bank has been offering this facility for a couple of years. While the Pixel is available only with Visa, it would be extended to other networks in the future, Rao said.