Tag: RBI

RBI panel, BFSI News, ET BFSI

Banking & Finance

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Well governed large urban cooperative banks (UCBs) which meet parameters should be allowed to function along the lines of small finance banks (SFBs) and universal banks, a Reserve Bank of India (RBI)-appointed expert panel has suggested.

The four-tiered structure

A Reserve Bank-appointed committee has suggested a four-tier structure for UCBs depending upon the deposits and prescribed different capital adequacy and regulatory norms for them based on their sizes.

The RBI committee said that UCBs can be split into four categories — Tier-1 with deposits up to Rs 100 crore; Tier-2 with deposits between Rs 100-Rs 1,000 crore, Tier-3 with deposits between Rs 1,000 crore to Rs 10,000 and Tier-4 with deposits of over Rs 10,000 crore.

It suggested that the minimum Capital to Risk-Weighted Assets Ratio (CRAR) for them could vary from 9 per cent to 15 per cent and for Tier-4 UCBs the Basel III prescribed norms.

The panel said tier-3 urban cooperative banks with deposits of Rs 1,000 crore to Rs 10,000 crore must function like SFBs if they meet a capital adequacy ratio of 15%. The loan portfolio of tier-3 urban cooperative banks shall conform to the stipulations made for SFBs, it added.

Tier-4 UCBs with deposits of over Rs 10,000 crore should be allowed to function like universal banks if they meet the 9% capital adequacy ratio requirement, leverage ratio and has a fit and proper board and chief executive. Such UCBs can be given operational freedom for branch expansion and authorized dealer licence on a par with universal banks.

Smaller UCBs with deposits of up to ₹100 crore will be categorized as tier-1 UCBs and those with deposits of ₹100-1,000 crore will be categorized as tier-2 UCBs.

The RBI panel has also prescribed separate ceilings for home loans, loan against gold ornaments and unsecured loans for different categories of UCBs.

In February, the RBI had the constitution of the Expert Committee on Primary (Urban) Co-operative Banks under the chairmanship of N S Vishwanathan, former RBI Deputy Governor.

Mergers of UCBs

The committee emphasised that all-inclusive directions (AID) should be treated on a par with moratorium under Section 45 of the Banking Regulation Act.

If AID is imposed, a bank should not continue thereunder beyond the time permitted to keep a bank under moratorium — three months extendable by a maximum of another three months.

Currently about 50 UCBs are under AID, causing lot of hardship to depositors as deposit withdrawals are capped.

On consolidation of UCBs, the panel said that RBI should be largely neutral to voluntary consolidation except where it is suggested as a supervisory action.

“However, the RBI should not hesitate to use the route of mandatory merger to resolve UCBs that do not meet the prudential requirements after giving them an opportunity to come up with voluntary solutions,” it said.

The minimum capital stipulation provides an embedded size to a UCB.

The committee said that under the Banking Regulation (BR) Act, the RBI can prepare scheme of compulsory amalgamation or reconstruction of UCBs, like banking companies.

This may be resorted to when the required voluntary actions are not forthcoming or leading to desired results.

The panel further said Supervisory Action Framework (SAF) should follow a twin-indicator approach — it should consider only asset quality and capital measured through NNPA and CRAR — instead of triple indicators at present. The objective of the SAF should be to find a time-bound remedy to the financial stress of a bank.

If a UCB remains under more stringent stages of SAF for a prolonged period, it may have an adverse effect on its operations and may further erode its financial position, it said.

The RBI may also consider superseding the board if the bank fails to submit a merger/conversion proposal within the prescribed timeframe and take steps to avoid undue flight of deposits once the news becomes public. A Stage III UCB is one where its capital to risk-weighted assets ratio/CRAR is less than 4.5 per cent and/or net non-performing assets/NNPAs is greater than 12 per cent.

Housing loans

On housing loans, the panel said the maximum limit on housing loans may be prescribed as a percentage of Tier 1 capital, subject to RBI-prescribed monetary ceiling for Tier 1 UCBs (but higher than the present ceiling) and respective board of directors-approved ceiling for Tier 2 UCBs.

For Tier 2 UCBs, the risk weight on housing loans may be prescribed based on size of the loan and loan-to-value (LTV) ratio, in line with SCBs.

The panel has also made recommendations regarding loan against gold ornaments with bullet repayment option.

It also said that umbrella organisation (UO) is expected to play a crucial role in the strengthening of the sector.

For that, it must be a financially strong organisation with adequate capital and a viable business plan. The minimum capital for the UO should be Rs 300 crore with CRAR and regulatory framework akin to the largest segment of NBFCs, the panel said.

Alos, in the long run, the UO may take up the role of a Self-Regulatory Organisation (SRO) for smaller UCBs.

The report said there were two broad sources of constraints because of which the sector has underperformed.

The first set of factors are internal to the sector. Many UCBs are small and do not have either the capability – financial or human resources – and/or possibly inclination to provide technology enabled financial services.

The second set of constraints are external to the banks. These emanate from the rather restrictive regulatory environment under which they have had to operate.

There were suggestions that licensing of new UCBs should be immediately opened up. There are over 1,500 UCBs already. The committee has suggested that the existing UCBs may be allowed to expand their footprint.



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RBI committee suggests measures to strengthen the Urban co-operative banks, BFSI News, ET BFSI

Banking & Finance

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Larger urban co-operative banks may be allowed to issue stock exchange tradable instruments to shore up capital and allow them to function as an universal bank according to the recommendations of an Expert Committee on Primary (Urban) Co-operative Banks which also suggests more enabling regulations giving their role in enhancing financial inclusion.

The committee headed by former deputy governor N S Vishwanathan, suggesting a four tiered structure based on the size of deposits recommends setting up of an Umbrella Organisation with a minimum capital of Rs 300 crore to help smaller co-operative to acquire scale and help with capital and liquidity support whenever needed.

In the long run, the umbrella organisation -UO- may take up the role of a Self-Regulatory Organization (SRO) for smaller UCBs where the organisation could run an independent audit/inspection and supervisory division. Once the UO stabilizes, it may explore the possibilities of converting into universal bank and offer value-added services on behalf of its member banks. An UCB could get an incentive of lower capital requirement if it is a member of the UO

The committee also seeks to address capital raising constraints of larger UCBs banks by facilitating issue of tradable securities . It suggests that RBI declare certain securities issued by UCBs eligible to be covered under the Securities Contract Regulation Act to facilitate their listing and trading in a recognised stock exchange may be made. ” Till such time, the RBI may consider allowing banks in Tier 3 and 4, having the necessary technology and wherewithal, to issue shares at premium to persons residing in their areas of operation subject to certain conditions” the RBI report said. This is significant in the context of the recent collapse of PMC Bank where its capital was almost wiped out.

The Committee felt that a liberal regulatory approach may be adopted for UCBs that meet a certain minimum level of capital and reserves (net worth) and CRAR requirements.

A Tier-4 UCB with a deposit base of over Rs 10,000 crore which meets both the entry point capital and CRAR requirements applicable to universal bank may be allowed to function on the lines of a universal bank if RBI is satisfied that it meets the financial requirements and has a fit and proper Board and CEO.

Given that UCBs have the potential of driving financial inclusion and credit delivery to those with limited means, the committee felt that regulatory policies can now be more enabling.

At the same time, there were divergent views on allowing the UCBs to convert into joint stock companies. One view was that conversion of UCBs into banking companies is against the co-operative principles as the retained earnings in co-operative structure cannot be distributed.

A contrary view was that voluntary conversion after a well-informed decision taken by the General Body of the UCB in a democratic manner should not be barred by regulation, particularly where the underlying legislation is not restrictive on the use of retained earnings.



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Groww, Upstox, Motilal Oswal to be hit by Sebi’s latest rules on digital gold sale, BFSI News, ET BFSI

Personal Finance

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The National Stock Exchange (NSE) has instructed all members, including stockbrokers and wealth managers, to wind down the sale of digital gold on their platforms by September 10.

This came after capital markets regulator, the Securities and Exchange Board of India (Sebi), flagged such sales as a breach of the Securities Contracts (Regulation) Rules (SCRR), 1957.

The move, ahead of the crucial festive season months when Indian consumers typically become active purchasers, has hit the country’s nascent yet burgeoning digital gold industry.

Investors are worried over its future as well as its legitimacy in the eyes of financial sector regulators, Sebi as well as the Reserve Bank of India.

Sebi’s concerns may have stemmed from potential use of client funds by brokers to buy digital gold which it views as a non-broking business, according to a review of documents and discussions with multiple industry sources.

The lack of regulatory oversight on companies that sell and store physical gold corresponding to the virtual assets being allocated to the end-consumer, is also cause for concern.

“…It has, however, come to the notice of SEBI/Exchange that certain members are providing a platform to their clients for buying and selling of digital gold. SEBI vide a letter dated August 3 has informed the Exchange that the said activity is in contravention of Rule 8 (3) (f) of SCRR, and members should refrain from undertaking any such activities,” a circular issued by NSE on August 10 showed.

According to a source, similar notices have been issued by all leading exchanges in India in recent weeks. ET could not independently verify this.

New age fintech brokers such as Upstox, Groww, Paytm Money as well as traditional brokers such as HDFC Securities and Motilal Oswal offer customers an option to “invest” in digital gold.

These companies have been given time till September 10 to discontinue the product as well as inform consumers about the move, as per the circular, which ET has reviewed.

Uptsox, Groww, NSE and Sebi did not respond to ET’s emails. Spokespersons for Paytm Money and HDFC Securities declined to comment.

The sale of digital gold in India, although a new concept, is “nothing but facilitating the purchase and sale of physical gold through a digital medium, and the ability to hold it digitally,” said Kishore Narne, head of commodities and currencies at Motilal Oswal.

“We understand Sebi’s concerns as it doesn’t fall under its scope of regulation, they have asked all Sebi-regulated entities to refrain from offering such products, and we are honouring it,” Narne said, adding that customers already holding digital gold would not be impacted by the new rules.

The NSE move comes as a jolt to fintech startups that have been building business models around facilitating purchase and sale of gold virtually in partnership with metal and gold firms – Augmont Gold Ltd, MMTC-PAMP India and Digital Gold India.

The business model involves customers being allowed to buy gold for as low as one rupee, as a digital asset. The gold companies then store an equivalent amount of gold in their lockers – against a virtual certificate of purchase.

These companies, though not under the purview of any financial sector regulator, are said to have a self-regulatory audit and diligence mechanism.

The NSE circular is only applicable to members of the NSE, said Renisha Chainani, Head of Research, Augmont Gold.

“This circular has been issued pursuant to some clarifications put by the regulator, Sebi, on NSE members for offering digital gold. All such partners shall work within the framework and guidelines prescribed by Sebi from time to time,” said Chainani.

MMTC and Digital Gold India did not comment.

Non-broking platforms such as PhonePe and Google Pay among others also offer digital gold to customers and are unlikely to be affected by this development.

India’s digital gold market is worth about Rs 5,000 crore annually, according to industry insiders.

The number of users with over Rs 100 balance in digital gold could be in the range of 5-6 million, said Deepak Abbot, the cofounder of Indiagold, a gold loan fintech.

“This could be an early indication that the regulator is looking to come up with regulations for the industry. Currently, these transactions are not under the purview of either Sebi or RBI,” said Abbot.

A senior stock exchange official told ET that brokers cannot offer such unregulated products through their Sebi-registered entity or platform.

“All the listed products are settlement guaranteed and carry a different risk profile. If an investor loses money due to such digital gold, neither the regulator nor the exchanges can be held responsible,” the executive said. “Hence, our action is limited to the extent that you cannot use Sebi-licensed platforms to sell such products.”

A leading securities lawyer who represents the interests of several brokerages said digital gold typically falls in a regulatory grey zone currently and unless Sebi comes out with a set of regulations, brokers cannot sell the products.

“The problem seems to be that some of the fintech players offer digital gold on the same page right next to where they sell mutual funds or listed shares,” the lawyer said. “However, there is no bar on these fintech firms to create a separate legal entity and set up a different page to sell digital gold.”



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HDFC Bank will issue 3 lakh cards a month, regain lost ground, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank on Monday unveiled its plans to regain the market share it lost in credit cards during an eight-month ban on new issues. The bank said that it will issue three lakh cards a month — its monthly run rate before the ban — for the next two to three quarters, following which it will scale up to five lakh cards a month.

Outlining the plans, the bank’s group head for payments & consumer finance, digital banking and IT, Parag Rao, said, “In the next three to four quarters, we will regain all our lost market share. The bank has lost close to 2% as rivals like ICICI Bank, Axis Bank and SBI Card swooped in to fill the demand.

According to Rao, the fourpronged strategy would be to tweak the products, sell more cards to its six-crore customer base, add more partners like fintech companies, telecom, hospitality and pharma companies. It has also revamped the digital process to allow more do-it-yourself features to customers on the bank’s app.

Rao said that despite the embargo from the RBI, the bank managed to scale up spend volumes by 60% year-on-year during the first quarter. “Our card spend is on an average one and a half times that of the industry,” said Rao. He said in the eight months the bank has been busy analysing industry trends and customer behaviour and now planned to put them to work.



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HDFC Bank outlines aggressive play in credit cards to regain lost mkt share in a year, BFSI News, ET BFSI

Banking & Finance

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Mumbai, Aug 23 (PTI) HDFC Bank on Monday said it aims to regain the two per cent market share in the credit card market it ceded to rivals during a recent ban, within a year by aggressively tapping into its existing depositor base. The bank will also focus on forging new partnerships to sell more cards and will not deviate from its conservative approach on taking credit risks as it goes aggressive in the market, its group head for payments and consumer finance, digital banking and IT, Parag Rao, told reporters.

On August 17, RBI lifted the ban on HDFC Bank which had prevented it from issuing new credit cards from December 2020. However, the restrictions on launching new digital initiatives are yet to be lifted. Its smaller rivals, including ICICI Bank and SBI Card, have utilised the opportunity created by HDFC Bank’s absence to narrow the gap with the market leader in the last eight months.

Going forward, HDFC Bank has set specific milestones for itself, which will include ramping up monthly card issuances to the November 2020 level of 3 lakh in up to three months, and going up further two 5 lakh a month in another two quarters, Rao said.

In the next three-four quarters, HDFC Bank is targeting to regain all the lost market share, he added.

When asked about the restrictions on digital launches, Rao said the bank continues to engage with RBI on compliance with remedial objectives. It has closed the short term milestones, is in the final laps on the medium term ones and work is in progress on the long term ones, Rao said, adding that it is waiting to hear from RBI.

HDFC Bank’s outstanding credit cards has declined to 1.48 crore as of June 2021 from 1.53 crore in November 2020 as a result of the ban. The same for ICICI Bank increased to 1.10 crore from 97 lakh, and SBI Card had its number increase to 1.20 crore in June 2021 from 1.12 crore in November 2020.

Rao said while the bank lost market share by number of active cards, it has been able to retain its share by overall spending courtesy specific initiatives to prod customers.

He said overall spends on the credit card portfolio have increased 60 per cent in the April-June quarter as against the year-ago period while the Earnest Monthly Instalment (EMI) option on high value purchases has seen an 80 per cent increase, and the bank is 1.5 times ahead of competition on spends.

When asked about the credit quality, Rao declined to comment on the specifics on the portfolio but asserted that it will not be softening on its conservative stance on extending credit. The bank will make use of more digital and data analytics products while extending credit, he said.

The bank expects a bulk of the new cards to come from existing customers who have deposits with the bank, Rao said, adding that it has 6 crore customers at present.

Serving the existing customers helps from a quality perspective as the bank has a better understanding of the customers, he said, adding that it already has a significant amount of customers with pre-approved credit cards who have not been contacted in the last eight months.

Moreover, customer insights are also pointing to higher affinity to cards with lower credit limits, he said. The bank will start serving such segments as well.

Apart from its own customers, the bank will depend on partnerships and tie-ups with other players, including fintech players, payment companies and corporates to engage new clients. The partnership with Paytm announced earlier in the day is the first such initiative, he noted.

In a statement, the bank said it has 20 such initiatives planned over the next 6-9 months, which will also include co-branded offerings with companies in the pharma, travel, fast moving consumer goods, hospitality, telecom and fintech space.

As it engages more with partners, the ratio of new to bank customers in the incremental credit card customers will increase to 25 per cent of the overall from the present 20 per cent, Rao said.

“The last few months have been spent in readying ourselves for the future. When the restrictions from the regulator were in place, we utilised the time to chalk out a new strategy. With our new offerings as well as our existing suite of cards, we are confident of meeting the needs of our customers and ‘come back with a bang’,” he said.

The bank scrip closed 0.60 per cent higher at Rs 1,523.50 a piece on the BSE on Monday as against gains of 0.41 per cent on the benchmark.



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RBI imposes Rs 27.5 lakh penalty on Dhanlaxmi Bank, Rs 20 lakh on a co-op bank, BFSI News, ET BFSI

Banking & Finance

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The RBI on Monday said it has imposed a penalty of Rs 27.5 lakh on Dhanlaxmi Bank, Thrissur, for contravention of certain norms related to the ‘Depositor Education and Awareness Fund Scheme’.

The banking regulator also imposed a Rs 20 lakh penalty on the NE & EC Railway Employees’ Multi-State Primary Cooperative Bank, Gorakhpur, for deficiencies in regulatory compliance.

In a statement, the RBI said penalty on Dhanlaxmi Bank has been imposed for contravention of a section of the Banking Regulation Act, 1949 read with a paragraph of The Depositor Education and Awareness Fund Scheme, 2014 (the scheme).

The RBI said the Statutory Inspection for Supervisory Evaluation (ISE) of the bank was conducted with reference to its financial position as on March 31, 2020, and the examination of the Risk Assessment Report and Inspection Report pertaining to the same, revealed, inter-alia, contravention of the provisions of the Act read with the scheme.

A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention.

“After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of contravention of aforesaid provisions of the Act read with the scheme was substantiated and warranted imposition of monetary penalty on the bank,” it said.

In another statement, the RBI said the inspection report of the NE & EC Railway Employees’ Multi-State Primary Co-operative Bank based on its financial position as on March 31, 2019 revealed non-adherence/violation of specific directions issued to it under the Supervisory Action Framework (SAF).

In both cases, the RBI said, the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.



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Centrum Financial Services to set up SFB to take over PMC

Banking & Finance

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Centrum Financial Services Ltd (CFSL) has initiated the process of establishing a small finance bank (SFB), which will eventually take over the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank, by taking steps towards creating necessary infrastructure in this regard, according to the Reserve Bank of India (RBI).

The RBI had accorded “in-principle” approval to CFSL on June 18, 2021, to set up an SFB. This approval was in specific pursuance to CFSL’s offer in response to PMC Bank’s Expression of Interest (EoI) notification.

CFSL, which is a non-banking finance company, and Resilient Innovations Pvt Ltd (BharatPe), which is a fintech company, are equal partners in setting up the SFB.

Petition nixed

In an additional affidavit filed in the Delhi High Court in the Bejon Kumar Mishra (petitioner) versus Union of India & Others (Respondents) case, RBI said: “It is envisaged that Central government will be approached for approval and notification of a scheme of amalgamation of PMC Bank with the proposed SFB under Section 45 of the Banking Regulation Act after the proposed SFB starts functioning.” The RBI has sought the dismissal of the writ petition filed by Mishra

The central bank submitted that all efforts are underway to expedite the resolution of PMC Bank in the best possible manner and in the larger interest of all depositors of that Bank.

Also read: Depositors of PMC Bank still await clarity on withdrawals

Mumbai-based PMC Bank was placed under All Inclusive Directions with effect from close of business on September 23, 2019, on account of major financial irregularities (fraud perpetrated by a real estate group), failure of internal control and systems of the bank and wrong/ under-reporting of its exposures under various off-site surveillance reports.

The bank has been under directions for close to two years now and depositors, especially senior citizens, have been finding it difficult to make ends meet.

Deposit withdrawal has been capped at ₹1 lakh per depositor during the entire period the bank is under directions.

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83% of RBI’s MPC statements had net negative sentiment : Study

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Negative sentiment had dominated the statements of RBI’s Monetary Policy Committee (MPC) since its first meeting in October 2016 to the latest one in August 2021, according to a sentiment scoring analysis done by professors of Great Lakes Institute of Management, Chennai.

The communication sentiment study of RBI’s MPC statements, done by professors Vidya Mahambare and Jalaj Pathak, was based on analysis of 180 statements of MPC members related to 30 meetings (6 member statements per meeting) held between October 2016 and August 2021.

Negative sentiment

“An overwhelming majority over 83 per cent (149 out of 180 MPC member statements) have a net negative sentiment, reflecting up until 2019 the weak domestic economic environment and from March 2020 the adverse sentiment as a result of the Covid pandemic,” the analysis found.

The study used an improved sentiment analysis technique which assigns a positive or a negative net sentiment score for each statement which is then averaged for every meeting. A negative score can arise due to concerns related to lower domestic/global growth and/or higher inflation and inflation expectations, financial instability, and vice-a-versa for the positive score.

The researchers said that since communication sentiment is not directly quantifiable, researchers have begun to use text analysis techniques to convert the qualitative information contained in central banks’ communication such as monetary policy statements and central bankers’ speeches, into a quantitative indicator.

Also read: MPC Minutes: ‘Not for extended accommodative stance’

“However, there hasn’t been such sentiment analysis of the statements of the Monetary Policy Committee (MPC). This research note is the first attempt to quantify and compare net sentiment in statements of MPC members of India’s central bank, the RBI,” the authors noted.

Out of 30 MPC meetings held until August 2021, the average MPC communication sentiment is negative for 26 MPC meetings, marginally positive for 1 (October 2016), and nearly neutral for 3 meetings (December 2016, April 2018, and February 2021), the report found.

However, the report added that the longest consecutive worsening of the negative sentiment in six MPC meetings was in the pre-Covid period from August 2018 to June 2019.

“Before the pandemic hit, the communication sentiment had begun to improve but hit the lowest point in the statements of March -2020. Since October 2020 once again the sentiments expressed in the MPC statements had improved, before deteriorating again in April 2021 on the expectation of the second wave,” the report said.

“The average net sentiment in the MPC statements remained negative and marginally worsened in the latest August 2021 meeting,” the report concluded.

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Deposit customers, alliances to lead HDFC Bank’s credit card comeback, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank expects to increase its credit card issuance to half a million per month by February 2022 riding on its expanded liability base, new partnerships and wider product suite as it looks to make up for the lost nine months in which it was restricted in issuing new cards by the Reserve Bank of India (RBI).

Parag Rao, group head, payments, consumer finance, digital banking and IT, HDFC Bank said the bank expects to get to the pre-ban run rate of 300,000 per month in the next two months and increase it to 500,000 by February in largely driven by new deposit customers added to the bank’s franchise in the last nine months.

“Over the years our business has grown largely on the back of our liability customers and we expect that to continue. Over the last nine months we have added 400,000 accounts every month, this in addition to the 60 million customer base we have will be the main drivers of our growth and we have enough headroom to grow. We already have a pipeline of pre-approved cards based on customer profiles that have been monitored since the ban,” Rao said.

80% of the bank’s new cards are issued to new customers currently and Rao does not expect this ratio to drop much dispute new commercial partnerships the bank plans to launch.

On December 3 last year, RBI barred HDFC Bank from issuing new credit cards and introducing new digital products after multiple glitches linked to digital banking, cards and payments on the bank’s platform were reported in the past two years.

The ban was lifted on August 17 but not before impacting the bank’s market share as number of outstanding credit cards dropped from 15.4 million in November 2020 to 14.8 million in June 2021, even as its closest competitors gained at its expense.

Even as the credit card ban was lifted the RBI still has some restrictions on the bank for new launches of digital business generating activities planned under Digital 2.0. It is unclear how those restrictions will impact the bank.

Despite the loss of market share in credit cards, HDFC Bank remains the largest issuer of credit cards in India ahead of SBI Card (12 million) and ICICI Bank (11 million) latest available RBI data as of June 2021 showed.

Rao said the bank used the last nine months in relooking at its value proporsition, engaging with existing customers more deeply and building new strategic alliances which will be announced starting from the festive season next month.

HDFC Bank has lined 20 initiatives including co-branded cards with tie-ups with travel, fintech, consumption, hospitality and mobility companies among others. These alliances will be unveiled over the next nine months.

Rao said depsite the ban the bank has been able to retain its market share in terms of card spends and spends on its cards are still 1.5 times higher than the nearest competitor.

The bank will use more digital data for underwriting and is also in the process to create a multichannel social media and phone-based hub to address customer greviances.

The bank also plans to increase its footprint in merchant acquiring and point of sale businesses to 200 million from 2.3 million currently, Rao said.



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HDFC Bank aims to regain lost market share in 1 year after RBI lifts credit card ban, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank is looking at winning back the market share by number of cards in the next one year, a senior official said on Monday. The largest private sector lender by assets was allowed to issue new credit cards by the RBI last week, over eight months after being banned from doing so due to concerns over repeated technological outages.

Parag Rao, its group head for payments and consumer finance, digital banking and IT told reporters that the bank has set some milestones for itself as it seeks to re-enter the market.

The first is to achieve monthly new credit card sales to 3 lakh, the number right before the ban in November 2020, Rao said, adding that the same will be achieved in three months.

Two quarters after that, it aims to take the monthly new card sales to 5 lakh a month, Rao said, adding that in three to four quarters from now, it plans to regain the market share by number of cards.

Rao added that during the ban, the bank lost its market share by number of cards but was able to maintain the market share on initiatives taken to prod users to spend.

It can be noted that as per data, the bank’s market share by number of cards had come down by around 2 percentage points to under 25 per cent, as smaller rivals including ICICI Bank and SBI Cards seized the opportunity to close the gap.

After the lifting of the ban, HDFC Bank had spoken about coming back with a bang.

Rao said spends on credit cards are 60 per cent higher in April-June quarter on its card portfolio.

The bank will depend on its internal set of customers to grow the number of cards and is also looking at partnering with key players like Paytm announced earlier in the day, to increase its sourcing.

Rao also said that the conservative approach on the credit front will continue for the bank even as it goes aggressively on the new business sourcing.

The bank scrip was trading 0.57 per cent up at Rs 1,522.95 a piece on BSE at 1318 hrs as against gains of 0.43 per cent on the benchmark.



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