Credit card numbers dip, spends rise
At the time of global financial crisis in 2008 and 2009, credit card was one business that took the maximum beating worldwide. For the Indian banks too credit card business, which is inherently risky but offers high margins, went sharply down in terms of number of active cards.
From aggressive selling of cards, banks swung to the other extreme and deactivated thousands of cards when cardholders showed some signs of stress in paying the bills.
According to the RBI data, the number of credit cards issued by banks in India has dropped from 276 lakh in March 2008 to 180 lakh in March 2011.
But interestingly, despite the sharp fall in number of cards, card spends has vastly improved. In the financial year 2010-11, according to the data compiled by Atos Worldline that manages payment card and other transactions emanating from over 220,000 merchants in India, credit card spends at merchant PoS (point of sales) terminals increased by 22 per cent to Rs 75,516 crore in 2010-11 from Rs 61,824 crore in 2009-10.
Spends per card up
The average annual credit card spends per card has also increased significantly by 25 per cent to Rs 41,862 in 2010-11 from Rs 33,335 in 2009-10.
“With the Indian economy registering a positive growth in GDP, consumers seem to be in a buoyant mood in using credit card for making purchases,” said Annual Payment Card Industry Survey 2011, recently brought out by Atos Worldline.
Another reason is instead of mass marketing, banks are now focusing sharply on premium category card holders whose monthly spends are high and delinquencies are low.
“With most banks in consolidation phase, it is predicted that the financial year 2011-12 may see a marginal rise in the credit card base or it may remain constant,” said Atos Worldline, India CEO Sameer Nemavarkar.
It does not make any business case for the banks to maintain inactive accounts in their systems as it adds avoidable maintenance cost and space in their systems, he added.
Among banks, HDFC Bank was the largest credit card issuer in 2010-11 with 50 lakh cards and a market share of 28 per cent. It was followed by ICICI Bank (40 lakh and 22 per cent), SBI (23 lah and 13 per cent) etc. (See table for top 10 card issuers). In terms of sector wise break up, market share of private banks has increased to 54 per cent in 2010-11.
Public sector banks, who were never aggressive in credit card business, had 19 per cent market share and the foreign banks 26 per cent.
Yet another set of data reflecting high growth in electronic banking is the massive growth in debit card issuance. Since almost all banks now issue debit cards to the savings bank account holders, the base for debit card has increased from 1,815 lakh in March 2010 to 2,278 lakh by March 2011.
Though the total debit card spends has jumped by 46 per cent in 2010-11 to Rs 38,691 crore, the figure is just the half of amount of money spent using credit cards.
Top 10 Credit Card Issuers
Banks 2010-11
(No of Cards)*
1 HDFC 50.00
2 ICICI 40.00
3 SBI 23.00
4 Citibank 15.00
5 Stan Chart 14.00
6 HSBC 10.00
7 Axis Bank 6.33
8 RBS 5.00
9 Canara Bank 3.09
10 Barclays Bank 2.00
* In lakh
