The RBI’s macro economic survey presented a day before the credit policy, had indeed got some grim news. But in all that bad news, what got hidden was the fact that India’s credit card business is also heading towards some troubled times. While the central bank did not explicitly mention it, data in the 100-page document showed that the outstanding balance on credit cards rose 87% till the end of May to Rs 26,600 crore, raising worries for bankers during a period of economic slowdown.
And while the data for the credit might be dim, the dynamics within the industry has changed. HDFC Bank which started its credit card business in 2003 has overtaken Citibank’s credit card business, which was started in 1990. It has even overtaken SBI to become India’s second largest credit card issuer with 4.2 million cardholding customers. Number one remains ICICI Bank Ltd, which has issued around 8.5 million credit cards. Citi has a credit card base of about 3.8 million.
But now the news is that the banks have started going slow and have become less aggressive and some of them are even reducing their customer base due to rising NPAs. Banks say that NPAs have risen to 10-15% of total credit card lending from 5-8% one year ago. SBI Cards has increased checks on customer profile andwas also looking at leveraging existing bank customers. ICICI Bank is ensuring that customers do not roll over outstanding dues over a long period and those who do so are being coaxed to convert the outstanding dues into a personal loan. Not that there is now any guarantee that the loans would also be paid off!
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