New Delhi, Nov. 23: The credit card industry is growing at the rate of 30 per cent per annum. It is expected to grow at a higher rate next year, says a study paper prepared by Venture Infotek Research, a venture capital research body.
Approximately, 85 lakh credit cards are expected to be sold by the end of this financial year. This indicates a 42 per cent rise in credit card sale in a span of two years — from 49 lakh cards in 2001 to the expected 85 lakh cards by 2002-03.
The reach and usage of credit cards have widened significantly. With banks like the State Bank of India, ICICI Bank and HDFC Bank strengthening their hold across cities and offering lower eligibility norms, credit cards usage has increased in the B-grade cities and among people belonging to the lower income group, says the study prepared by Venture Infotek.
According to the report, Citibank, which is ranked number one, is expected to issue 20 lakh credit cards by 2003. Other major players will be Standard Chartered, State Bank of India-GE, HSBC, ICICI Bank and American Express which are expected to issue 44 lakh cards in all. Other smaller credit card firms will together issue 21 lakh cards.
Though the credit card industry registered a 30 per cent growth for the year ended March 2002, banks like ICICI and SBI have clocked more than the industry average. While SBI grew by 50 per cent, ICICI grew by almost 100 per cent.
The break-up, however, shows that four multi-national banks, including Citibank, Standard Chartered, HSBC and American Express will sell a total of 52 lakh cards by year 2003. The report says that MNC banks will account for two-third of the total credit cards in India.
Speaking to The Telegraph, Vivek Kudva, country head, personal financial services at HSBC said: “In the coming months, however, besides MNCs, other banks like SBI, ICICI and HDFC will also contribute significantly towards the credit card spent. In India, the money spent on credit card is smaller in comparison to the cash spent. This is a great opportunity for us to make it the other way round”.
Under the private banks category, ICICI and Tata Finance Limited is expected to issue a total of 9 lakh cards. Similarly, public sector banks like SBI, Bank of India, Bank of Baroda, Andhra Bank, Canara Bank and Vijaya Bank is expected to sell a total of 23 lakh credit cards by year 2003.
The total card spend in the payment industry is approximately Rs 13,500 crore. Citibank is a market leader with 32 per cent share followed by Standard Chartered which holds 25 per cent share.
The card-spend pattern shows a distinct bend towards multinational companies. The two reasons attributed to this is the selective profiling of customers and encouraged spending by these MNCs. The combined market share in terms of card spend of MNC banks is about 75 per cent and enjoy a market share of around 65 per cent in terms of cards issued.
Some schemes, which encourage spends through cards, include the loyalty point scheme by MNC banks which entitles a cardholder to receive loyalty points that can be exchanged for further gifts. Also, tie-ups and rebates on specified compulsive spends like petrol and telephone bills given by banks like HSBC, SBI and American Express encourage spending.