With a base of 5 million cards, HDFC Bank is now an undisputed leader in credit cards space having displaced ICICI Bank, which has pared its credit card base from a high of 8.5 million to four million cards at present. HDFC Bank has managed to grow the business by tapping existing customers, sourcing about 80 to 85% of new cards from this catchment. Citibank’s card base, which at its peak was 3.8 million, is now close to 2.5 million.
Meanwhile, credit card spends by Indian consumers have seen a 27% jump in August 2010 to Rs 6,259 crore from Rs 4,932 crore in April 2009, the Reserve Bank of India (RBI) data shows. Interestingly though, banks are chasing profitability and not volumes: the credit card base in the country in August this year, at 18.85 million, is lower by about 3 million compared with the 21.94 million cards in August 2009. In April, last year the credit card base was 24.3 million.
“Though banks may not be aggressively pushing accounts, customer spends on cards are on the rise,’’ said Sandeep Bhalla, business manager cards for Citibank India.
He added, “2009 was a transition year as banks moved away from simply acquiring accounts to focus on growing spends on the cards. The trend is confirmed by Abhay Kumar Singh, CEO, SBI credit card. Singh said,”Customers today are becoming more responsible in their spending habits.” Both Bhalla and Singh are convinced that credit bureaus are making for a more robust environment. “Banks’ underwriting norms have become much better with the entry of credit bureaus,’’ observes Bhalla.
HSBC India, with a card base of 1.5 million, is also growing its portfolio once again. Stuart Davis, HSBC India, said, “The bank has started acquiring customers for its cards business though the pace of growth may not be as rapid as it was between 2004 and 2007.’’ The cards business is also seeing lower delinquencies with non performing loans having come off from the highs of 18-20% to about 8% to 10%, according to a senior official from the payments industry.
In their bid to get more bangs for the buck banks are eyeing top-end customers. “The credit card market is reviving in the emerging affluent segment where annual income levels are between Rs5 lac to 10 lac,” says Bhalla. An ICICI Bank spokesperson, said, “We are focusing on existing customers especially at the high and premium ends. Customers, who already have an embedded relationship with us, are the best target market. We are also cherry picking good customers from the open-market, especially from some of our alliances and co branded-partner databases.’’
Banks today are being far more cautious in their approach to the business. For instance, ICICI Bank has set a precondition that customers applying for a gold or platinum credit card need to maintain a fixed deposit with them, of at least Rs20, 000 for a minimum tenure of 180 days. Most banks including ICICI Bank have stopped acquiring customers from the open market
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