Also sees
decline in value of credit card transactions
The uncertain
macro-economic environment may have prompted HDFC Bank to go
slow on expanding its credit card portfolio. For the first time in past several
months, the country's largest credit card issuer saw a sharp decline in its
credit card base on a month-on-month basis.
HDFC Bank closed June 2013 with a portfolio of 5.94 million credit cards compared
to 6.56 million cards a month earlier. The private lender's card base was at
its lowest level since August 2012. The value of HDFC Bank credit card
transactions through POS (point of sale) terminals also fell to Rs 3,350 crore
in June 2013 from Rs 3,674 crore in the previous month.
The bank's credit card base has expanded every month between April 2011 and
March 2013. It fell marginally on a month-on-month basis in April 2013 before
rising again in May 2013. But in June 2013, the credit card base declined by
almost 9.5%. "The current environment is not ideal for unsecured lending.
Also, HDFC Bank's credit card base has become large in the last couple of
years. So, probably the bank has decided to go slow and refrain from
aggressively expanding this business," a banking analyst told Business Standard
requesting anonymity. HDFC Bank did not offer comments for this story. An email
sent to the bank's spokesperson went unanswered.
A few bankers said the Telecom Regulatory Authority of India's (TRAI) warnings
to banks on making unsolicited calls to customers for selling their products
and services may also have a role to play. "HDFC Bank's model for card acquisition
is dependent on tele-marketing calls. In recent times, TRAI has become
extremely vigilant and has warned banks not to make unsolicited calls to
numbers that are in the do-not-disturb (DND) registry. This has affected
HDFC Bank's new card acquisition. The attrition numbers are also high since
HDFC Bank has a very large base of credit card holders. These factors have contributed
towards the month-on-month decline in the bank's credit card portfolio,"
said a senior executive of a large private sector bank.
Industry analysts and bankers also said that in the wake of alleged violation
in KYC (know-your-customer) norms the bank may have been reluctant in offering
cards to customers who do not have a banking relationship with HDFC Bank in the
past.
However, some of the banks that had slowed their unsecured lending expanded
their credit card base on a month-on-month basis. For instance, ICICI Bank's
credit card portfolio increased to 2.95 million at the end of June 2013 from
2.89 million in the previous month. Hongkong and Shanghai Banking Corporation's
(HSBC) credit card base also increased marginally to 505,158 from 503,966
during this period.
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