In a shift from its traditional practice of
offering credit cards to its captive clients, HDFC Bank, India’s second-largest
private sector lender, is now offering more cards to people outside its
existing client base.
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Currently, customers outside the bank’s
existing client base account for 25 per cent of its card base, compared with
10 per cent a year ago.
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According
to Pralay Mondal, country head (retail assets and credit cards), the move is in
line with the bank’s strategy to enter the high-end cards segment. “As we go to
super-premium clients, we would look more for external customers. We have
already made a shift. While the ratio earlier stood at 90:10, about 25 per cent
of our business (in credit cards) now comes from our external clients,” Mondal
said during an interaction with Business Standard. With a book value of close to Rs 6,000 crore, HDFC Bank accounts for nearly
30 per cent in the credit card business in India, with the number of cards at
5.5-6 million. “We are issuing close to 85,000 to 90,000 cards a month, and
with some new launches, we expect the monthly issuance to cross 100,000 cards
soon,” Mondal said.
Speaking about the Infinia high-end credit
cards, which the bank launched last month, Mondal said the response has, so
far, been good and the bank now plans to introduce a few cards a couple of
notches below Infinia to cater to the demand. “We have a cap of 5,000 cards for
Infinia, but the demand is for a lot more. That is why we want to come out with
variants just below Infinia quickly,” he said.
The lender has seen robust demand for its
retail products and has been disbursing Rs 5,000 crore every month, which, it
says is the highest in the industry. “We have disbursed loans worth Rs 15,000
crore over the last three months. Each and every product in our retail segment
is profit-making. If the total advances in the banking sector grows 17 per cent,
retails loans for the industry would grow by around 15 per cent in the current
financial year. For HDFC Bank, the growth (in retail loans) would be
significantly higher than that,” he said. The bank’s retail book has grown
around 30 per cent in 2010-11 and growth in cities, barring that in the top
nine ones, contributes nearly half to the bank’s retail assets. Nearly 70 per
cent of the bank’s retail loans comprise auto, personal, home, commercial
vehicles and two wheeler loans. The bank is slowly beefing up its presence in
segments like gold loans, loans against shares and education loans.
Despite seeing aggressive growth in the
rising interest rate scenario, the bank is confident of maintaining the rate of
growth in retail loans—which is about 50 per cent of its total loan book. The
bank also dismissed worries that high rates would translate into a rise in
delinquencies in its retail loan portfolio, especially in the unsecured
segment.
