Banks are launching cards, credit offers in a festive surge despite the risks
Banks are optimistic about credit cards as the festival season approaches and are launching several new cards and offers at a time when customers traditionally loosen their wallets.
While lenders remain wary of unsecured loans, they place calculated bets on credit cards. In addition to market leaders such as SBI Card and HDFC Bank, who are launching new cards, banks that have not previously offered credit cards are also pushing into this highly competitive market. Many lenders zoom in on their existing customers that they have enough data about.
The private lender Federal Bank, based in Kochi, entered the credit card business in September in collaboration with the Visa card network. A few days later, the lender launched another card, this time with the domestic RuPay card network.
“We said our credit cards would be an inventory-to-bank (or an existing customer) product. This is because we said a few years ago that our foray into unsecured customers will be directed to existing customers, and we have done so in our personal loan business, “Federal Bank CEO Shyam Srinivasan said in a recent interview .
While banks have recognized the importance of tapping into the young population and keeping them committed to an emerging product like a credit card, they are now refining their offering.
“India is traditionally a debit card market. However, the growth in credit card issuance over the past decade has changed that narrative and credit cards are being used prominently, ”PwC said in a statement in August.
This growth will be accelerated by a variety of financial institution products and services that are increasingly being used by customers, particularly the millennial population, according to the note.
According to the Reserve Bank of India (RBI), the total number of credit cards at the end of July was 63.4 million.
On September 29, India’s largest credit card issuer, HDFC Bank, announced the overhaul of three of its existing cards to offer more to its customers in order to regain lost market share over the next three to four quarters.
The bank had lost ground due to an embargo from the Reserve Bank after mishaps in e-banking.
Just a month or so since the ban was lifted through September 21st, HDFC Bank has issued over 400,000 credit cards.
“I think more responsible financial institutions are getting into the credit card space as it will help the market grow. As I said before, there is a whole new group of customers coming in, like the Millennials and people who are new to the workforce but are digitally savvy customers and are a strong target segment for cards, ”said Parag Rao, Group Head for Payments. Consumer finance, digital banking and IT, HDFC Bank.