Kotak Bank to enter in corporate credit card biz

Kotak Mahindra Bank is planning to launch a corporate credit card product and will also be entering into partnership program for launching co-branded credit cards by April 2009.

Subrat Pani, Business Head (Cards), Kotak Mahindra Bank, in an interview told Business Line, “We are looking at entering into partnerships in the high-end segments in airline, retail and entertainment like movie or dining chain. An announcement in this regard is likely by January and launch by March or April”.

Earlier this year bank had entered the credit card business by launching two Visa Gold Cards, a Visa Platinum Card and a Visa Signature Card to complete the range of financial services from the Kotak Group.

Pani informed that since the launch seven months back, the bank has issued more than 1 lakh cards and is on course to meet the first year (April 2009) target of 2,50,000 cards.

He also added that yet the default rates have not started. “Typically, a write-off or a default happens after 180 days of consecutive non payment. So it is too early to comment on the default rates,” Pani added.

As per information provided by him, though there is no negative growth, the industry will not witness the compound annual growth rate (CAGR) of 38 per cent observe in the last five years.

“Last year, we saw a growth rate of 40 per cent when around Rs 58,000 crore was spent on credit cards. But this year, as compared with last year, the growth is likely to be around 24-25 per cent and end at around 22 per cent, which is likely to come down further to around 12 to 15 per cent next fiscal (2009-10),” he said.

However Pani, added that the industry growth will probably get rebound in 2010-11 to around 30-35 per cent when the spending might be between Rs 90,000 crore and Rs 1,00,000 crore.

Giving details about the usage pattern, he said that at present, the average spend per account per month stands to about 2.25 times more than the industry average (Rs 4,000) spending through gold cards.

Speaking about the future of the credit card business, Pani explained that in the next two years, the industry will be strictly taking care in terms of the kind and quality of customers to be taken on the portfolio.