credit card business. HDFC Bank ready with strategy ‘to come back with a bang’

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 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 RBI, the bank said it will continue to engage with the regulator and ensure compliance on all parameters.

In a letter to employees, HDFC Bank MD and CEO, Sashidhar Jagdishan, said the lender will now be able to demonstrate its technology transformation.

He also underlined that in the coming months the bank will aggressively go to the market with not just an existing suite of credit cards, but also new offerings in the form of co-brands and partnerships.

“This transformation agenda will help drive our ambitious future growth plans, and also help us enhance customer experience. We will not just ‘run the bank’, but also ‘build the bank’ as we go ahead, riding on digital and enterprise factory with infrastructure scalability, disaster recovery resilience, enhanced monitoring capabilities, and security enhancements as the key pillars,” he further said.

The RBI has partially relaxed curbs on the private sector lender on sourcing new credit cards.

The RBI had, in December last year, directed HDFC Bank to temporarily halt the sourcing of new credit card customers as well as launches of digital business-generating activities.

The largest player

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, enabling competitors such as ICICI Bank and SBI increase their market share.

Analysts said the RBI decision before the beginning of the festival season is a positive development.

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

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 same 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 and net interest income 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.

Digital 2.0

The bank has also been working on strategies for digital expansion. In June, it had announced plans to roll out multiple digital products in the next 15 to 24 months once the RBI lifts the halt. It is also working on two key initiatives – digital factory and enterprise factory – under this initiative.

It is also understood to be working with banking tech firm Zeta on building a digital bank.

“Plutus is a strategic partnership between Zeta and HDFC Bank with the mission to build a digital bank completely from scratch. Plutus will serve the bank’s 25 million-plus consumers and drive growth to double the base to 50 million-plus in the next 5 years,” Zeta had said in a job posting on its website.

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