HDFC Bank’s credit card base decreases by 3 liters in December-March

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According to data released by the central bank, the number of credit cards in circulation at HDFC Bank dropped from around 3.23 lakh between December 2020 and March 2021 to 1.5 crore.

The Reserve Bank of India (RBI) embargo on HDFC Bank supplying new credit card customers may have started to affect the lender’s card base. According to data released by the central bank, the number of credit cards in circulation at HDFC Bank dropped from around 3.23 lakh between December 2020 and March 2021 to 1.5 crore.

The lender has long been the market leader in terms of cards in circulation and spending, but the RBI’s decision to penalize the lender for failures in its digital services could slow growth. It was not immediately clear whether the card base had shrunk due to a card churn rate or a conscious deletion of inactive cards by the bank. Queries to the bank went unanswered until going to press.

ICICI Bank could prove to be the main beneficiary of HDFC Bank’s absence from new issues. In March, it continued to dominate new issues, accounting for nearly 52% of new cards, according to data released by the RBI. The total number of new credit cards issued during the month was 4.02 lakh.

According to an HDFC Bank official who requested anonymity, the lender is preparing to return to the market once the regulatory sanction is lifted. “We are using this time to strengthen our accountability base and keep our system ready to enter the market once the embargo is lifted,” he said. Historically, the bank has issued the majority of its credit cards to its own deposit holders.

In a call with analysts after HDFC Bank’s results at T4FY21, management said it opened about 2 million new liability relationships in the March quarter and about 7 million liability in the last quarter. full year. It has more than 2.5 million employee customers in business during the year.

CFO Srinivasan Vaidyanathan said the bank is continually investing in increasing spend, depth and breadth, rotation behaviors, product upgrades, line improvements and card lending. . “The impact of not issuing cards is felt on new employees in companies, on the integration of new companies, etc. This loss of new customers can normally be offset within a few quarters after the shutdown is lifted, as the bank continues to supply. liability customers who will be pre-approved, ”he said, adding:“ About three-quarters of our supply comes from existing customers of the bank. In the meantime, the lender is focusing on dialogue with existing card customers who are dormant or inactive in order to “resuscitate” them.

So far, analysts were optimistic about the bank’s ability to bounce back into its traditional area of ​​strength. After the fourth quarter results, Kotak Institutional Equities said in a note: “Overall we have not seen any business impact as the liability franchise holds up well. The bank is currently working with its existing credit card base to generate business, but this issue would have an impact in the medium term if not addressed quickly. “

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