Banks on revival path of credit card business

The economy is recovering back thus several credit card issuers, including public and private sector banks are in the process of their credit card business. Earlier during the period of slowdown in 2009, the banks had slowed down the process of issuing the credit card and were adopting cautious approach while issuing card. But the banks have started pushing their credit card business.

HDFC has plans to increase its credit card business and will be issuing around 100,000 credit cards every month over the next couple of months. At present bank is issuing around 75,000 credit cards every month.

Parag Rao, head, product, portfolio and service delivery, credit cards, HDFC Bank told Financial Chronicle, “We have already scaled up our credit card business during the past three-four months. The credit card business has huge potential and we are hoping to distribute 100,000 cards every month.”

When asked do bank have any plans to bring back the earlier limits in credit and cash facilities, Parag stated that bank might do an upward revision for the cardholder. Parag said, “Revision of the credit limit is very common part of the credit card business and generally, the revision goes hand-in-hand with the economy”.

The senior official of SBI Cards also told the lender is in the process to revive its credit card business in a big way. The official said, “In past few months, we have started giving more reward points on credit card spends. We would shortly become aggressive in adding new customers, depending upon the status of economy.”

As per RBI data, in 2009 there was around 25 per cent decrease in the total number of cards in the system which was about 21 million cards from close 26.5 million cards a year ago.

Ranjan Dhawan, chief general manager, Punjab National Bank, said, “We would provide credit cards to our existing customers (subject to applying), who have a six-month-old account with the bank. The credit limit is depends upon many factors including salary and home and car ownership, among others. If someone owns a house, we do provide him/her higher limit.”

Even ICICI Bank, the largest card issuer of the country is going to scale up its credit card business.

However some banks say their main focus will be on increasing the profitability from the credit card business rather than just focusing on expansion of portfolio. J M Garg, chairman and managing director of Corporation Bank pointed out, “Very few credit card issuers are making profits. But, despite being a small card issuer, we are making profit from the card business. We wish to increase our size in terms of total outstanding numbers of card issued. Our prime focus would remain on remaining profitable and we would continue with same model.”