Plastic is fantastic: Credit cards register highest growth in five years

Axis Bank leads charge, SBI narrows gap with ICICI, HDFC Bank on top; numbers inch up to 25m

Updated - September 16, 2016 10:00 am IST

Published - June 02, 2016 07:52 am IST

Credit card issuances have recorded an impressive growth of 16 per cent year on year to 24.5 million in the financial year ended March 31, 2016 as banks added 3.4 million cards to the system. This was the highest growth in the number of cards added by banks after Reserve Bank of India (RBI) began sharing the data in 2012. Card spends too registered a 26.7-per cent growth in FY16.

HDFC Bank, the second -largest private sector bank in the country, stayed at the top of the heap with 7.28 million cards, or a 22-per cent growth over the previous year, data released by the RBI showed.

However, it is Axis Bank, the third-largest private sector lender in the country, which upped the ante in 2015-16. The bank saw a 39 per cent growth in its card base to 2.41 million, while spend on cards grew by 46 per cent.

Sangram Singh, head, cards and merchant acquiring, Axis Bank, said: “We have two or three things we focus on. One is our customer base. We have 1.6 crore (16 million) savings bank customers. The second is we are not limited to the metro cities. Nearly half of our growth comes from cities other than the top metro cities.”

While Axis Bank focuses mainly on its existing customers to increase its card base, it also offers cards to non-customers on a selective basis, mainly to customers of its credit card partners such as Lufthansa and Air Vistara.

“We are adding about one lakh cards every month. We expect to grow faster than the industry,” Mr. Singh said, adding the bank aims to grow 40 per cent in card number in the current financial year.

This growth has moved Axis to fourth position in term of number of cards, toppling foreign lender Citibank.

While Axis Bank added more cards than HDFC Bank, the latter’s card base is equal to the combined card base of the second and third-largest card issuers, ICICI Bank and SBI Cards. The latter is the credit card arm of the State Bank of India, the country’s largest lender.

SBI Cards, which grew by 16 per cent in numbers and by 26 per cent by value, has narrowed the gap with ICICI Bank, which grew by about 10 per cent in FY16.

Vijay Jasuja, CEO, SBI Cards, said: “We have tied up with five banks, and that helped. These banks don’t have their own credit card, so they offer SBI cards to their customers and earn a fee.”

He added, “Last year, we had tied up with two private sector banks, Federal Bank and Lakshmi Vilas Bank, which has helped card penetration. We also have exclusive tie-ups with IRCTC and Big Bazaar.”

Foreign lenders Citibank and Standard Chartered, which are among the top five card issuers, saw a decline in the number of outstanding cards, indicating domestic players are getting the market share being vacated by foreign lenders.

Mr. Singh said, “The top four card issuers are domestic players with large savings bank franchises.”

Credit card issuances hit a record high in 2007-08 when numbers touched 27 million, bankers said. However, following the global financial crisis in 2008, bad loans from unsecured loans mounted and banks became cautious. As a result, the number of cards fell to 18 million in 2009-10. Banks started pushing credit cards again from 2012-13 as they were better prepared to price risk as credit history of individuals became available.

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