Tag: credit card

RBI lifts ban on HDFC Bank issuing credit cards, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India (RBI) has lifted an eight month ban on HDFC Bank in a big relief to the private sector lender, a bank spokesperson confirmed. On December 3, in an unprecedented move the bank was barred from issuing new credit cards and launching any new digital products after multiple issues linked to digital banking, cards and payments on the bank’s platform in the last two years.

HDFC Bank, the largest issuer of credit cards in India lost market share in the last few months as restrictions on issuing new cards meant sales stopped. Outstanding credit cards dropped from 15.4 million in November 2020 to 14.9 million in May 2021.

However, in a call with the media at the end of June the bank’s senior management expressed confidence that they will make up for the lost time by cross selling to liability and other asset customers once the ban on issuing new cards is lifted.

Parag Rao, group head, payments, consumer finance, digital banking and IT at HDFC Bank said the bank is preparing to return to the market “with a bang” whenever RBI removes the ban. In the last seven months the bank has put an early warning system to manage large volumes, declogged processes and replaced old technology as part of its short and long term plan submitted to RBI, Rao said.



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slice raises Rs 75.5 crore in debt in Q1 FY22

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Fintech start-up slice has raised Rs 75.5 crore in debt in the first quarter of this fiscal from multiple financial institutions, including Northern Arc Capital, Niyogin Fintech, Credit Saison India and Vivriti Capital.

Rajan Bajaj, Founder and CEO, slice, said, “The banking industry in India often views credit cards as a loan product instead of a high-frequency payment instrument. Their main focus is to optimise the fees and portfolios while overlooking the experience. However, we see slice card as a classic payment product, and we are solving it as a customer experience problem with a customer-centric approach in mind.”

Launched in 2019, slice card focuses on millennials and Gen Z. It has three million registered users and is accepted at 99.95 per cent of merchants across the country that accept Visa.

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Foreign banks lose card market share, BFSI News, ET BFSI

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Foreign banks have seen their share of credit cards come down by a third in the last three years. In terms of value of transactions, their share has halved as that of private and public sector banks have grown.

According to data released by the RBI, foreign banks had 57 lakh credit cards outstanding as of March 2018. At that time, there were 3.8 crore credit cards in India, which gave the multinationals a market share of 15%. However, despite losing market share, the foreign banks had significant clout because of the higher value of transactions by their customers who spent more than the average cardholder. In 2018, the foreign banks had monthly card spends of Rs 10,380 crore — a 23.4% share.

Fast forward to March 2021, when the total market expanded to 6.2 crore cards while the number of cards issued by foreign banks stood at 66 lakhs, reflecting a market share of nearly 11%. It is not just in the number of cards that the multinationals have been losing ground. In terms of value of transactions too, foreign banks have a market share of 11.8% in the Rs 72,372-crore monthly volume.

While private banks have consolidated their market share in the card space, increasing their share from 63% to 66%, public sector banks have grown from 21.6% to 23.2% in three years. State Bank of India accounts for almost 80% of all public sector banks. Overall, SBI has 19% of the credit card market, which is still behind the 24% share of HDFC Bank.In global banks, four dominate the credit card space — Citi, Amex, StanChart and HSBC. These MNC banks have also played a pioneering role in the card business in India and they dominated the market in the ’90s. Citi’s decision to exit its retail business in India could further reduce share of foreign banks, should the portfolio be taken by a local player. Additionally, American Express faces a freeze on on-boarding new customers due to data-localisation norms even as more private banks are stepping in.

In 2018, American Express had 3% of the credit card market in terms of number of customers. But it accounted for 10% of all spending by credit card customers in India. In 2021, their share of cards shrunk to 2.5%, while the share of spending declined to 4%. Citibank, which had a 7% share of cards and 9% share of spend, saw these fall to 4% and 6%, respectively. HSBC has held ground better than others with a market share of 1.4% as of March 2021 (1.5% in ’18) and retaining its 1% share of total spend.



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ICICI Bank launches co-branded credit card with HPCL, BFSI News, ET BFSI

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ICICI Bank today announced the launch of a co-branded credit card with Hindustan Petroleum Corporation Limited (HPCL) to enable users to get benefits and reward points for using multiple credit cards in one. Named ‘ICICI Bank HPCL Super Saver Credit Card’, it is powered by VISA and offers benefits to customers on their everyday spends on fuel as well as other categories including electricity and mobile, departmental stores like Big Bazaar and D-Mart, and e-commerce portals, among others.

Sudipta Roy, Head, Unsecured Assets, ICICI Bank said, “We are delighted to partner with HPCL to launch the ‘ICICI Bank HPCL Super Saver Credit Card’. Typically, similar credit cards offer accelerated benefits on spends in one category. This card breaks that barrier as it enables customers to save on every transaction that they make. This truly makes the card a ‘super star’ of savings,”

HPCL Executive Director, Retail, S K Suri, said “HPCL is very happy to partner with ICICI Bank to launch ‘ICICI Bank HPCL Super Saver Credit Card’ with unique offerings and rewards to enhance customer experience. This credit card will help in promoting the digital payment ecosystem at retail outlets and meet the expectations of the customers with its innovative offerings. The customer will also get additional loyalty points when they use this card on our HP Pay App.”

Customers can apply for the ‘ICICI Bank HPCL Super Saver Credit Card’ through the Bank’s internet banking platform or the mobile banking app, iMobile Pay. They get a digital card in a 100% contactless and paperless manner. Further, customers can manage their transaction settings and credit limit conveniently on the iMobile Pay app.

Additionally, they can upgrade their existing ICICI Bank credit card to ‘ICICI Bank HPCL Super Saver Credit Card’ using iMobile Pay and internet banking. The PAYBACK points are credited to the customer’s PAYBACK account which is auto-created at the time of issuance of the card. Customers can then redeem these points as per their choice on the PAYBACK website, ‘HP Pay’ app, or at PAYBACK partners stores/website. They can also redeem the PAYBACK points for purchasing fuel at HPCL retail outlets.



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HDFC Bank cautious on retail biz, BFSI News, ET BFSI

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Mumbai: The second wave of the pandemic has turned HDFC Bank cautious with respect to retail loans. The bank’s overall retail loan book shrank from Rs 5.27 lakh crore at the end-March 2021 to Rs 5.23 lakh crore at the end-June. Retail loans fell with a drop in credit card outstandings, auto loans, two-wheeler loans and loans against securities.

According to HDFC Bank’s chief financial officer Srinivasan Vaidyanathan, credit card outstanding shrank to Rs 60,429 crore in end-June from Rs 64,674 crore in end-March because of a drop in revolving credit. He said that the focus was on the quality of credit and around three-fourths of the bank’s credit card customers have deposits that are on average five times the credit card outstanding. He was addressing analysts in a conference call after the bank’s results for the first quarter of the current fiscal.

Speaking in the same call, head (retail assets) Arvind Kapil said that the bank was now seeing buoyancy returning to the personal loan segment and expects good growth in future.

The bank, which is facing a freeze on issuing new cards, has completed an audit of its IT systems as required by the RBI and is now waiting to hear from the central bank. Even as it awaits the RBI’s nod for resuming card issuance, the bank is rapidly growing its card-acceptance business. Vaidyanathan said that the bank already has 2.3 million merchant-acceptance points and it has a 50% market share of merchants being on-boarded for card acceptance as against 40% last year.

HDFC Bank’s chief credit officer Jimmy Tata said that, during the quarter, things had not been the most orderly because of the second wave. “We were pretty much back to pre-Covid level until March, till the second wave hit us in April. We found our staff getting infected rapidly and we stopped going out on recovery calls. Most of the work was work-from-home. It is only in the month of June that we had the ability to start going out,” he said. In the second quarter, there has been a high level of vaccinations in the bank and staff have returned to the office for calling on borrowers.

According to Tata, the one product segment that has seen a non-Covid impact was diesel commercial vehicles (CVs), because they have not been able to pass on the sharp hike in fuel costs. He said that the bank was watching the portfolio as it would take two quarters for the price hike to be passed on. “We expect that by the festival season, things would have been brought back on an even keel, with cost increases passed on.”

On the cards business, Srinivasan said that HDFC Bank’s debit card issuance would not be hit because of the ban on Mastercard except for a couple of co-branded cards. He said that cards contribute between one-fourth to a third of the bank’s fee income in any quarter.



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RBL Bank’s credit card issuance rate to be impacted post RBI’s Mastercard ban

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RBL Bank on Thursday said its credit card issuance rate will be impacted post the Reserve Bank barring Mastercard Asia Pacific from onboarding new credit, debit and prepaid cards customers with effect from July 22 as it failed to comply with data storage norms.

RBL Bank, which currently issues credit cards on the Mastercard network only, said it has entered into an agreement with Visa Worldwide on Wednesday to issue credit cards enabled on the Visa payment network. “Our bank’s current run rate of approximately 1,00,000 new credit card issuances per month could potentially be impacted till such time that there is clarity from the regulator on issuing new credit cards on the Mastercard network or till the technical integration with Visa is complete,” RBL Bank said in a regulatory filing.

Technology integration

The bank expects to start issuance of credit cards on the Visa payment network post the technology integration which is expected to take 8-10 weeks. It said the company awaits further information from Mastercard on RBI’s supervisory action. “The debit and prepaid cards issued by the bank are already enabled on other payment networks in addition to the Mastercard network,” RBL Bank said.

Also read: Co-branded cards, exclusive bank tie ups to get impacted

It said, as of date, it has approximately 3 million credit card customers and is the fifth largest credit card issuer in the country with approximately 5 per cent market share.

Reserve Bank of India (RBI) imposed restrictions on Wednesday on Mastercard Asia/Pacific (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from July 22, 2021. The supervisory action will not impact existing customers of Mastercard.

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Credit card spends limping back to normalcy, but stay lower in Q1, BFSI News, ET BFSI

Personal Finance

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If you thought that the over 20% discount offered on credit for your Swiggy offer is exceptional, you may expect more.

Credit card spends are likely to be lower in the first quarter despite a recovery in June. Analysts see credit card spends dropping 8% in the first quarter of June 2021 over the fourth quarter of the last fiscal.

At Rs 54,700 crore, credit card spends in May 2021 were still higher than the monthly spends between April and September 2020.

In April 2021, credit card spends totalled Rs 59,200 crore, higher than the monthly spends witnessed between April and September of 2020.

Going by the trend of UPI transactions in June, credit card spends are also likely to be high in June.

UPI June transactions

UPI enabled digital transactions surged 11.6 per cent month-on-month to Rs 5.47 lakh crore in June this year, according to the NPCI data.

In May 2021, the UPI (unified payments interface) transactions stood at Rs 4.91 lakh crore.

In terms of numbers, there were as many as 2.80 billion (280 crore) transactions during the month under review, as against 2.53 billion (253 crore) in May, according to the data.

NPCI’s other digital payments channels—such as Bharat Bill Payment System (BBPS), National Electronic Toll Collection (NETC), Aadhaar Enabled Payment System (AePS) and Immediate Payment Service (IMPS)—all recorded monthly growth in June.

The number of transactions on BBPS, primarily used for automated bill payments, grew nearly 16% sequentially to 45.47 million transactions in June. For Fastag, the growth was even sharper—at 35.34% to 157 million transactions—indicating an increase in mobility.

Similarly, IMPS grew to 303.7 million transactions in June from 279.8 million in May while AePS — which is used for cash withdrawals at micro ATMs, subsidy payouts and domestic remittance—grew to 87.5 million transactions from 84.2 million.

Card companies

Despite a ban on issuing new credit cards, HDFC Bank retained the largest market share at 27 per cent in spends in May while SBI Cards held 18 per cent.

Credit card spends limping back to normalcy, but stay lower in Q1

In December 2020, the Reserve Bank of India (RBI) barred HDFC Bank from making new digital launches and issuing new credit cards following repeated outages on the bank’s digital channels.

HIt by the ban on HDFC Bank issuing credit cards and economic slowdown, the number of credit cards outstanding grew just 1.9 per cent 622.6 lakh, as against a growth of 2.2 per cent during April-June 2020 to 5.74 lakh, according to RBI data. The number of new cards issued has been falling every month since January 2021 and was down to 21 lakh in April from 70 lakh in January, with most card issuers seeing slow growth. Monthly spends per card for the industry declined to Rs 9,500 in April from an average of Rs 10,500 over the past six months, according to analysts.



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Over 20 lakh Amazon Pay ICICI Bank credit cards issued on Tuesday

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ICICI Bank and Amazon Pay on Tuesday announced that the lender has crossed the 20 lakh mark for issuing ‘Amazon Pay ICICI Bank’ credit cards.

“In the process, the card has emerged as the fastest co-branded credit card to cross this milestone in the country,” they said in a statement.

It crossed the 10 lakh milestone for issuances in October last year. The card has on-boarded 10 lakh customers in the last nine months, with over 80 per cent of new customers availing the card completely digitally, without any physical interaction.

Amazon Pay and ICICI Bank introduced the card, powered by Visa, in October 2018.

“With the introduction of Video KYC in June 2020, many new-to-bank customers applied for the card from various parts of the country, which significantly boosted the user base…We believe the card is well poised to become the largest co-branded credit card in the country,” said Sudipta Roy, Head – Unsecured Assets, ICICI Bank.

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Non-food credit growth of banks slackens to 5.9% in May

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Non-food credit growth of scheduled commercial banks (SCBs) slackened to 5.9 per cent in May 2021 compared to 6.1 per cent in May 2020 due to deceleration in credit growth to industry and services sector.

Per the Reserve Bank of India’s statement on sectoral deployment of bank credit for May 2021, credit to agriculture and allied activities continued to perform well, registering an accelerated growth of 10.3 per cent in May 2021 as compared to 5.2 per cent in May 2020.

Credit growth to industry decelerated to 0.8 per cent in May 2021 from 1.7 per cent in May 2020, the central bank said.

Size-wise, credit to medium industries registered a robust growth of 45.8 per cent in May 2021 as compared to a contraction of 5.3 per cent a year ago.

Credit growth to micro and small industries accelerated to 5 per cent in May 2021 as compared to a contraction of 3.4 per cent a year ago, while credit to large industries contracted by 1.7 per cent in May 2021 as compared to a growth of 2.8 per cent a year ago.

Credit growth to the services sector decelerated to 1.9 per cent in May 2021 from 10.3 per cent in May 2020, mainly due to deceleration in credit growth to NBFCs, transport operators and commercial real estate, RBI said.

However, credit to the trade segment continued to perform well, registering accelerated growth of 12.4 per cent in May 2021 as compared to 7.7 per cent a year ago.

The central bank said personal loans registered an accelerated growth of 12.4 per cent in May 2021 as compared to 10.6 per cent a year ago, primarily due to accelerated growth in vehicle loans and credit card outstanding.

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SBI Card partners with Fabindia to launch Fabindia SBI Card

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SBI Card, the country’s second-largest credit card issuer and Fabindia, a retail platform for a wide range of handcrafted products by the artisans of the country, have joined hands to launch an exclusive co-branded contactless credit card — Fabindia SBI Card.

The card is designed with curated benefits and privileges to offer a rewarding shopping experience to its premium customers and comes in two variants — Fabindia SBI Card SELECT and Fabindia SBI Card.

Speaking about the partnership, Rama Mohan Rao Amara, Managing Director & Chief Executive Officer, SBI Card, said in a statement “We are delighted to have Fabindia as our partner to bring unique value proposition to our affluent and premium consumer segment. Introduction of the new Fabindia SBI Card further bolsters our premium portfolio, reinforces our commitment to enable our customers to embrace digital payments and contribute to the country’s digital economy.”

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