By March end 20.35 lakh credit cards to be flushed out of the system

Venture Infotek, India’s leading payment solutions provider in its report has stated that by March-end around 20.35 lakh credit cards will be flushed out of the system. According to the report titled ‘Payment Card Industry 2009’ there has been a sharp decline in the card count to 226.64 lakh cards by March-end, as against 246.99 lakh cards as on March 2009.

In contrast, as per the study banks will be increasing their debit card count by 358.44 lakh cards by end of the year with 1,732.75 lakh debit cards.

ICICI Bank is leading the bandwagon by reducing its credit card count close to 15 lakh credit cards by the end of the financial year to 55 lakh cards from 70 lakh as on March 2009.

According to the annual report other leading banks are also reducing their credit card counts. State Bank of India aims to reduce its credit card count from 27 lakh to 25 lakh, Citibank will be reducing it from 25 lakh to 18 lakh. The other foreign bank ABN AMRO will be reducing its card count from 13.05 lakh to 10 lakh and Standard Chartered will be reducing it from 13 lakh to 11 lakh by the end of present financial year.

Abizer Diwanji, an executive director (banking) with KPMG said, “Banks have realized that it is not easy to run a credit card business in this country as losses for some of the leading players had peaked to almost 30-35 per cent in the past. Hence, most banks are reducing their credit card exposure.”

Overall a sharp drop in the total number of credit cards is being observed but some banks such as HDFC Bank, HSBC, Barclays, Axis Bank and Canara Bank are getting aggressive about increasing their credit card portfolios. According to the report, around 9.77 lakh cards will be added by these five banks.

However, all banks have seen increase in their debit card portfolios. The report stated, “The industry is expected to add around 358.44 lakh debit cards by the end of the present financial year.” Amongst the major banks SBI, ICICI Bank, Axis Bank, HDFC Bank and Punjab National Bank are going to see major increase in their debit card portfolios.

The head of cards working with a leading private bank said, the increase in debit cards is mainly due to rise in the number of new accounts.

To increase their transaction banking business, Indian banks are aggressively setting up ATMs in the country. As per the survey report, by the end of March 2010, the 39 banks together are expected to increase ATM counts in the country to 58,850.

The report says, “ATMs are expected to grow by 35 per cent during 2009-10 while SBI alone is expected to add close to 9,000 ATMs.”