HDFC Bank to go all out on credit cards business

On 17th August, RBI lifted the ban on HDFC Bank pertaining to issue of credit cards. In December 2020, RBI had imposed a ban on HDFC Bank issuing new credit cards as well as launching new digital initiatives. This was following constant complaints from customers of HDFC Bank over numerous cases of a service outage. On 17-Aug, the RBI lifted the ban on the issue of credit cards, but the ban on launching digital initiatives stays.

With the ban on credit cards lifted, HDFC has charted out an aggressive plan to recoup its lost market share over next 3 quarters. In the first phase, HDFC Bank will issue 300,000 cards per month till the end of this year. Effective Feb-22, HDFC Bank will scale this up to 500,000 cards per month. This will help HDFC Bank recoup its lost client base over the next 3 quarters.

Prior to the RBI ban, HDFC Bank had a total of 15.38 million outstanding credit cards. During the ban period, HDFC Bank saw its outstanding credit card customers reduce by 3.6% to 14.82 million. In India, its market share in terms of number of credit cards fell by 200 basis points to 23.6%. However, its wallet share of card spend, continued to remain at the same level, indicating that most of the exits were by low-value customers.

During the ban period, even as HDFC Bank lost card customers, SBI, ICICI Bank and Axis Bank were the big beneficiaries. However, despite the ban, HDFC Bank remains at the top in terms of the number of cards issued followed by SBI, ICICI Bank and Axis Bank in that order.

During the ban period, HDFC Bank was sourcing an aggressive 400,000 liability customers per month. Its first priority will be convert these liability customers into credit card customers of HDFC Bank. Certainly, India’s most valuable bank has its game plan in place.