Credit card issuances rise for third month

According to the latest data released by the Reserve Bank of India (RBI), the number of credit cards in the country increased by 128,000 in May.

HDFC Bank added the most number of cards in May (69,974). State Bank of India (SBI) was next with 34,183 cards. SBI sells credit cards through SBI Cards, its joint venture with GE Capital. However, ICICI Bank and HSBC have reduced their credit card portfolios by 11,029 and 11,024, respectively.

The number of issued cards at the end of May was 17.9 million, the highest since March 2011, RBI data showed. Total transaction via credit cards in May was Rs 9,307 crore (Rs 93.07 billion), a decline from the previous month's Rs 10,119 crore (Rs 101.19 billion).

The credit card base was at its peak at the end of March 2008, when the number was 27.6 million. However, following the global financial crisis and rise in delinquency rates, the base has been shrinking month-on-month till February 2012. Large players such as ICICI Bank and HSBC refrained from unsecured lending to improve their credit quality.

"Most banks have resumed credit card business in the last 12-15 months. But some large banks were still reducing their card base, as delinquency rates were high. Hence, the outstanding number has been declining till the beginning of this calendar year," a senior official in charge of the credit card business of a foreign bank said.

The official

added the number is increasing as large banks appear to have joined the party in the last few months and resumed credit card operation. Public sector banks, which traditionally have not been aggressive in the credit card space, have also improved their market share. Government-owned banks' market share improved to 17.4 per cent at the end of April from 16.2 per cent a year earlier.

SBI, the largest commercial bank in the country, has sketched aggressive expansion plans for its cards business. At the end of April, the bank had a card base of 2.25 million. It plans to source one million cards annually in the next couple of years.

Among private banks, HDFC Bank, the largest credit card player in the country, has been the most aggressive. The bank, which has a base of 5.7 million credit cards, has announced a slew of initiatives in this space, including the launch of Infinia, a no-limit card.

Bankers and industry analysts said the quality of data available with credit bureaus had improved in the last two years, allowing banks to target customers with a satisfactory credit history.

The credit card industry has also witnessed a couple of takeovers in the last 12-15 months. IndusInd Bank has entered the market by acquiring Deutsche Bank's credit card business, while Standard Chartered Bank and Kotak Mahindra Bank have purchased Barclays' card portfolio.

Some industry analysts expect the credit card base to touch 20 million by the end of the current financial year.