HDFC Bank aims to regain lost ground
The lender plans to recover market share in outstanding credit cards in 3-4 quarters
MUMBAI: Private lender HDFC Bank Ltd aims to recover lost market share in outstanding credit cards over the next threefour quarters, a senior official said on Monday, after the Reserve Bank of India lifted a ban on new card issuances.
Since the bank was barred from issuing new credit cards in December last year, rival lender ICICI Bank has been consistently gaining share. To be sure, HDFC Bank remains the largest credit card issuer, with 14.8 million cards outstanding at the end of June, followed by SBI Card with 12 million and ICICI Bank with 11.03 million. HDFC Bank now plans to further strengthen its position at the top.
“We really took this embargo as a fantastic opportunity to sit back, introspect, look at our products and services, look at all
processes and what is happening in the marketplace,” said Parag Rao, group head (payments, consumer finance, digital banking and Information Technology), HDFC Bank.
The bank, Rao said, had hit
the milestone of sourcing 300,000 new cards every month in November last year and plans to match it in the next three months. Once that is achieved, the bank targets onboarding 500,000 credit card customer
every month, over the next two quarters.
Last week, RBI partially lifted restrictions imposed last December on HDFC Bank, allowing it to resume issuing credit cards. However, the ban on new digital launches is still in place. On December 2, RBI had barred the bank from launching new digital banking initiatives and issuing new credit cards until it addressed lapses that sparked multiple glitches in its internet and mobile banking systems over the previous two years.
India’s largest private lender will primarily rely on its existing customer base to drive growth in the credit card space. According to Rao, the bank has been adding over 400,000 deposit customers every month for the last eight months and these would act as an immediate base to give credit cards to. The bank has planned over 20 initiatives which will hit the market in the next six to nine months as part of its plan to grow the business. These include the launch of new co-branded cards and several tie-ups.
“There are large corporates conglomerates, there are fintechs and I may not be able to share names because many of them are work-in-progress and not closed. But suffice to say that they cut across many important segments, which are important for the card space and important to us as a large retail bank,” said
Rao.
That said, Rao believes that as the number of credit cards increase, the percentage of customers sourced from the open market or those without an HDFC Bank account might rise. Prior to RBI’s embargo in December last year, about 15-18% of its credit cards came from the open market and Rao explained that even with the new tie-ups it might go up to 22-24% in the long run.
“However, our strategy will still continue to predominantly existing bank customers for the reason that our retail growth continues to be pretty robust. We will always have a set of pre-approved liability customers. We see no reason to dilute our credit standards and our conservative standards to credit will continue,” he said.
Last week, HDFC Bank chief executive Sashidhar Jagdishan thanked the central bank for the “rap on the knuckles” as it opened the bank’s eyes to the world of possibilities, re-imagine the information technology (IT) systems, processes and turbocharge the speed of technology transformation.