Credit cards. HDFC Bank ready with strategy on credit cards after RBI revokes ban

Private sector lender HDFC Bank on Wednesday said it is ready with strategies to ‘come back with a bang’ in the credit card space.

“As stated earlier, all the preparations and strategies that we have put in place to ‘come back with a bang’ on credit cards will be rolled out in the coming time. We are happy that we will be able to serve our customers again with the same dedication and humility,” it said in a statement.

Noting that the restrictions on all new launches of the digital business generating activities planned under Digital 2.0 will continue till further review by the regulator, the bank said it will continue to engage with the regulator and ensure compliance on all parameters.

Also read: Reserve Bank allows HDFC Bank to sell new credit cards

The statement comes after the Reserve Bank of India (RBI) relaxed curbs on the private sector lender on sourcing new credit cards. “...the RBI vide its letter dated August 17, 2021 has relaxed the restriction placed on sourcing of new credit cards. The Board of Directors of the Bank has taken note of the said RBI letter,” HDFC Bank said in a stock exchange filing.

The RBI had in December last year directed HDFC Bank to temporarily halt sourcing of new credit card customers as well as launches of digital business generating activities planned under its proposed programme‐Digital 2.0.

HDFC Bank is the largest credit card issuer with 1.48 crore outstanding cards as of June 2021. The temporary halt on sourcing of cards had to some extent, impacted its business and also enabled competitors such as ICICI Bank and SBI to increase their market share.

Analysts said the RBI decision before the beginning of festive season is a positive development. “...lifting of RBI restrictions before the beginning of festive season is a positive development as HDFC Bank has usually been aggressive during festive season and offers various discounts on consumer products,” Motilal Oswal said in a research note.

Also read: New credit cards: RBI partially lifts curbs on HDFC Bank

It pointed out that HDFC Bank had nearly lost about 6 lakh cards since the date of embargo. On the other hand, ICICI Bank, SBI Cards and Axis Bank almost added 13 lakh, 7.5 lakh and 3 lakh cards respectively over the similar period.

“Other players such as ICICI Bank and SBI Cards have sharply ramped up their incremental market share at about 49 per cent and 28 per cent during this period,” it said.

During recent quarters HDFC Bank has reported moderation in fee income/NII, due to the RBI restriction on credit cards sourcing as this segment contributes about 25 per cent to 33 per cent of the total fee income for the bank. HDFC Bank scrip was up 1.83 per cent in morning trade at BSE.

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