I'm Back—HDFC Bank Says To India Credit Card Market
HDFC Bank Ltd., India's largest private lender and the biggest card issuer in the market, is signalling that it intends to recapture lost ground as it returns to the credit card market. The bank had been forced to stop issuing new credit cards because of strictures imposed by the Reserve Bank of India due to frequent digital banking outages at the lender.
The eight-month-long ban was lifted on Aug 21.
On Wednesday, HDFC Bank detailed its new strategy for the credit card market, which includes targeting younger customers and those beyond urban areas. The bank claims it has already issued more than 4 lakh credit cards since the RBI lifted the embargo. "We are confident of recovering lost ground in the next three to four quarters," said Parag Rao, country head for the payments business, consumer finance and digital banking.
Three new credit card offering have been brought in—Freedom, MoneyBack+, and Millennia. Each is designed keeping a specific set of requirements in mind, providing convenience to the user without any overheads.
The Freedom credit card is designed for the young who've just started working and are new to various financial instruments. It earns 5x cash points on EMI spends, and the interest rate is 0.99% for the initial 90 days.
The card can be an ideal way for the youth to understand credit scores and navigate them, said Rao.
The second offering is MoneyBack+, targeted at families with higher expenditure, seeking value on daily transactions. The user can earn 10x cash points on five key merchants: Amazon, BigBasket, Flipkart, Reliance Smart Superstore and Swiggy. And 5x cash points will be awarded for EMI spends.
Lastly, the Millennia credit card is for high-spending millennials who constantly travel, shop, or dine. It offers 5% cashback with ten partner merchants: Amazon, BookMyShow, Cult.fit, Flipkart, Myntra, Sony LIV, Swiggy, Tata CLiQ, Uber and Zomato. All other expenses such as EMIs and wallet loads attract 1% cashback (except fuel).
As a leader in the cards space, we promised, we’d be back with a bang. We are now pushing the pedal not only to acquire new customers, but also to enhance offerings of our existing cards.Parag Rao, Group Head – Payments, HDFC Bank
Regaining Lost Share
In HDFC Bank’s absence, other banks, especially ICICI Bank Ltd., had ramped up their credit card issuances in India. As of June, ICICI Bank had 1.1 crore credit cards outstanding. SBI Cards & Payments Services Ltd., a subsidiary of State Bank of India, reported a credit card base of 1.2 crore credit cards as of June.
HDFC Bank lost close to180 basis points of the market share as of May since the end of November 2020 to close to 24%, while ICICI Bank and SBI Cards gained 130 basis points and 37 basis points to 17.4% and 19.2%, respectively, according to a report by Macquarie Research.
In recapturing lost ground, the bank will also focus on newer segments.
The bank intends to attract younger users just entering the financial system, said Rao. Penetration in rural and semi-rural regions is on the rise and currently accounts for 50-55% of all new cards issued, said Rao, adding that the bank will also focus on this market.