By February next year, HDFC Bank intends to have issued half a million credit cards every month, making up for the lost time by leveraging its pool of new accounts and alliances to re-establish its leadership credentials in a business where it has long been a forerunner.
Parag Rao, group head, payments, consumer finance, digital banking and IT, HDFC Bank, stated that “Over the years, our business has grown largely on the back of our liability customers and we expect that to continue,”. Rao stated that “Over the last nine months, we have added 400,000 accounts every month. This will be our main growth driver. In addition, we also have a 60 million customer base and only 15 million cards issued so we have enough headroom to grow,”.
The bank’s savings, current, and deposit accounts all have liability ties.
HDFC Bank was granted permission to issue new credit cards by the banking regulator last week. Since late last year, those barriers have been in place.
Rao also stated that “We already have a pipeline of pre-approved cards based on customer profiles that have been monitored since the ban,”.
The bank intends to reach its pre-ban run rate of 300,000 per month in the next two months, then boost it to half a million by February, owing to the addition of new savings, current, and deposit accounts to the bank’s franchise in the last nine months.
Currently, about four out of every five new cards issued by the bank are to new clients, and Rao does not expect this ratio to change substantially despite the bank’s intentions to develop new commercial partnerships.
After multiple documented technical difficulties in the previous two years, the Reserve Bank of India (RBI) stopped HDFC Bank from issuing new credit cards and releasing new digital goods on December 3 of last year.
Although the embargo was lifted on August 17, it had a negative impact on the bank’s market share, as the number of outstanding credit cards fell from 15.4 million in November 2020 to 14.8 million in June 2021, despite its closest competitors gaining market share. Regulatory constraints on some unnamed digital ventures remain in place.
Despite the loss of market share, HDFC Bank continues to be India’s top credit card provider, with 12 million cards issued, followed by SBI Card (12 million) and ICICI Bank (11 million), according to the most recent RBI data.
Rao said the bank has spent the last nine months rethinking its value proposition, deepening its engagement with existing clients, and forming new strategic collaborations, which will be disclosed next month.
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