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N.S. Vageesh

Chennai, Oct 22 If there is one product that can match the growth of mobile connections, it will probably be the debit card. At this rate, in five years, every Indian will probably be able to flash a debit card and a mobile – whatever else he or she does not have.

Currently, about 2 million cards are being added every month, according to the statistics provided by the Reserve Bank of India, in its September bulletin. Debit cards issued in the country have touched 85 million. They have doubled in about two years.

State Bank of India alone has about 30 million debit cards in the fray with ICICI Bank following at a little over 20 million cards. Every bank issues these cards free to their savings account holders. Mostly, ATM cards double up as debit cards that can be used at various merchant establishments.

With about 300 million savings bank accounts in the Indian banking system, and probably as many remaining to be included financially, there is still plenty of room for everyone to grow.

Although debit card growth has been exponential, the actual spends on the cards have been quite dismal. The average debit card spends are a little over Rs 1,000 per annum. It has remained at close to these levels in the last two years.

Mr B. Madhivanan, Senior General Manager, ICICI Bank, explains why the numbers don’t convey the full picture. He says, “Less than 5 per cent of those 85 million cards are active. We are trying various ways to encourage the higher use of debit cards.”

HDFC Bank spokesperson Mr Neeraj Jha provides another reason. He says, “Debit card purchases are usually small-ticket (petrol, restaurant, clothes, etc), while credit card purchases are large ticket (white goods, jewellery, travel etc).”

Mr D. Krishnamurthy, General Manager, Bank of India, says that of the nearly 1.8 million cards issued by his bank, only about 1 lakh are active. His bank has now started to provide incentives, including a free medical insurance cover, if your annual spends touch Rs 2 lakh. Other banks too offer their own variants of incentives. Mr Jha says, “Giving cash back, discount coupons for purchase at specific outlets and petrol surcharge waiver on petrol spends are some of the popular incentives that we offer to different customers.”

These efforts will have to be doubled and redoubled if the larger goal of moving transactions to electronic form is to be achieved. Even with a fraction of the population that is inside the organised banking sector, there are colossal challenges in handling paper. To give you an idea of what banks have to grapple with, take a look at the cheque clearing data: 137 crore cheques went around the country last year.

If you take currency, there is something like 3,983 crore banknotes of various denominations in circulation. And as for coins, there are 9,035 crore pieces of various denominations sloshing around in your pockets.

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More Stories on : Credit Cards & Debit Cards | Insight

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