India’s leading private lender HDFC Bank is working to build a digital challenger bank to target young customers, Financial Express has reported citing sources.
The lender has no plans to immediately launch the digital bank but it is preparing for the future when the regulator will issue licenses for digital banks.
HDFC Bank’s digital arm will offer all the products that the traditional lender does including savings accounts, credit cards and personal loans.
The lender is working to launch a digital arm as a new line of business. It will wait for the Reserve Bank of India (RBI) to give a regulatory clearance before it goes ahead with the plan, a source told the publication.
It will be primarily aimed at reducing the operational cost of the bank and cater to the needs of young customers.
Notably, the Indian central bank barred HDFC Bank from launching any new digital services in December last year and the restriction is still in place. The lender will have to wait till RBI’s regulatory embargo is removed to launch a digital unit.
Currently, there is no system of giving licenses to digital banks in India, but it is being discussed.