Hardayal Prasad, MD and CEO, SBI Card, talks to Naveen Ku­mar on a range of is­sues af­fect­ing the credit card in­dus­try and how SBI Card, one of the lead­ing play­ers in the seg­ment, is re­spond­ing to those chal­lenges.

Business Today - - IMPACT SNIPPETS - HARDAYAL PRASAD @ naveenku­mar80

The MD and CEO, SBI Card, talks on a range of is­sues af­fect­ing the credit card in­dus­try

Q: What is the growth rate in num­ber of cards and over­all out­stand­ing?

A: SBI Card has seen con­sis­tent growth over the past four-five years. We are the sec­ond largest card is­suer in In­dia with 16 per cent mar­ket share in num­ber of cards and spends. Our cus­tomer base crossed four mil­lion in Oc­to­ber 2016 and cur­rently, it is over six mil­lion. Last year, our mar­ket share in num­ber of cards has grown from 15 per cent to 16 per cent-plus. The mar­ket share in spends has also gone up from 12 per cent to 16 per cent-plus dur­ing this pe­riod. Av­er­age monthly card spends have in­creased to ` 6,500 crore-plus from ` 3,500 crore in a lit­tle over one year. The out­stand­ing port­fo­lio is now ` 14,000 crore­plus. It has gone up by more than 50 per cent be­tween De­cem­ber 2016 and Fe­bru­ary 2018.

Q: What has trig­gered the re­cent growth? Has de­mon­eti­sa­tion helped?

A: Ac­cep­tance of plas­tic money has cer­tainly in­creased, even in Tier II and Tier III cities. Con­sumers con­tinue to use credit cards for ev­ery­day spends. We were adding 50,000-60,000 cus­tomers a month be­fore de­mon­eti­sa­tion, but the num­ber shot up to one lakh-plus a month post de­mon­eti­sa­tion. Now we are adding two lakh-plus cards per month. Ac­cord­ing to RBI, the num­ber

of credit cards has in­creased sharply, from 26.8 mil­lion in Septem­ber 2016 to 36.9 mil­lion in Fe­bru­ary 2018.

Q: What about the de­fault rate?

A: We have been able to build our port­fo­lio keep­ing credit qual­ity in mind. The delin­quency rate is around 2 per cent, which is the in­dus­try norm. We are a 20-year-old or­gan­i­sa­tion, and we have learnt and built our busi­ness in­tel­li­gence, an­a­lyt­ics and wis­dom, and used these very ag­gres­sively in profiling cus­tomers. Any­body who can pro­file a cus­tomer very well can take quick and in­tel­li­gent de­ci­sions.

Q: EMI cards are be­com­ing pop­u­lar as peo­ple find it easy to un­der­stand. Do you plan to launch a sim­i­lar fea­ture?

A: EMI cards and per­sonal loans fall into the same seg­ment where we do our job pretty well. So, it was nec­es­sary to see what we could do other than pure vanilla credit cards. It was amaz­ing to find peo­ple leap­ing on to the fea­tures we brought on the EMI front. If you are at a PoS ma­chine or on an e-com­merce plat­form, we are there with our EMI op­tions.

Q: Do you think too much reliance on credit bu­reaus makes lenders wary of ac­quir­ing new cus­tomers with­out credit his­tory?

A: Apart from credit scores, we also work on in­ter­nal risk met­rics. About 10-15 per cent of the peo­ple com­ing on board do not have any credit his­tory. So, we give them a small credit limit to help build credit his­tory slowly and steadily. So­cial me­dia ac­tiv­ity is an­other in­di­ca­tor of a per­son’s life­style and spend­ing pat­terns. Cou­pled with tra­di­tional meth­ods, so­cial me­dia anal­y­sis can pro­vide a more com­pre­hen­sive as­sess­ment tool. We are now gen­er­at­ing so­cial credit scores, es­pe­cially for those new to the credit seg­ment.

Q: P2P lenders of­fer speedy, un­se­cured credit op­tions to cus­tomers with no credit his­tory and the cost is lower. How will you re­spond to that chal­lenge?

A: It is a process of over­all im­prove­ment in the fi­nan­cial sys­tem and it will con­tinue to hap­pen. There is space for ev­ery­body and we will re­main strong in our space. For a cus­tomer with a good credit score, fi­nan­cial in­sti­tu­tions like us al­ready pro­vide a very good in­ter­est rate. As for mar­ginal cus­tomers, we are not very sure how these (P2P) lenders will fare when there are de­faults.

Q: If phys­i­cal cards be­come ob­so­lete, how will you deal with it?

A: We think credit cards will re­main rel­e­vant. Of course, we have moved on a great deal and now you have Host Card Emu­la­tion (HCE). With HCE, you can eas­ily is­sue a token and trans­fer your card data to your phone, which will be­come your NFC-en­abled card so that you can tap and go. Out of three mil­lion PoS ma­chines in In­dia, 1.5 mil­lion are al­ready NFC-en­abled. Go­ing for­ward, all new ma­chines will have this fea­ture. Also, 40-45 per cent of spends on SBI cards are done at e-com­merce sites. That clearly in­di­cates we are mov­ing to­wards digi­ti­sa­tion. We will tap many other op­por­tu­ni­ties aris­ing in the dig­i­tal space.



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