HDFC Bank, the country’s largest credit card issuer, is confident of scaling up its monthly credit card issuances to 7.5 lakhs from current run rate of about 5 lakh cards in next six months, Parag Rao, Group Head – Payments, Consumer Finance, Digital Banking and IT, said.

According to Rao, this aim is doable on the back of two strategies —ride on the opportunity of enhanced customer base arising from the proposed mega $60.4 billion merger with HDFC Ltd; and increase the offering of RuPay-based credit cards to UPI customers.

“One part of optimism is that HDFC Bank’s internal customer base itself will grow with the merger. We will get access to good quality mortgage customers and good quality insurance customers. That itself will expand the customer base. Second would be to give UPI customers our RuPay platform based credit card ”, Rao told businessline.

Rao highlighted that HDFC Bank’s opportunity in internal bank customers is itself large. “I have got 17 million cards in a 70 million bank customer base. Here itself there is headroom to grow. With the merger with HDFC, there will be good quality customers who would be coming on board”, he added.

UPI not a competitor

Rao also asserted that he does not see the frenetic growth in usage of UPI as competition for credit cards, noting that there will always be need for credit. 

“I am overall bullish on the cards and payments space. Payments will be driver of consumption in the economy. I don’t see UPI as competition. UPI has given confidence to millions of people to accept electronic payment or pay for all the time you pay cash. It’s a good adoption platform”, he added.

Credit card-UPI linkage

Rao highlighted that the opportunity for credit card spends to grow is even larger, especially with NPCI’s linkage of credit card to UPI. 

“All that UPI customers are doing is direct to debit, pulling money out of account instantly. Some of them will require credit. What’s going to happen is with the linkage of credit card to UPI, customer spends will only grow”, he added.

There will always be need for credit — whether you choose to revolve and pay interest or whether you choose to avail of free credit period. The demand for credit card generically will continue. It has been growing 18-22 percent in pandemic times. Debit has been impacted more.  Even in pandemic period, demand for credit had not dropped, he added.

“All the millions of UPI customers are future credit card customers. They will upgrade to credit card. One key change that is happening is every customer will be customer of UPI, credit card, debit card etc…they will use multiple form factors”, Rao added.

Credit card spends to grow

In the medium term, Rao sees credit card spends to continuously grow. Credit card spends in the country were above the ₹ 1 lakh crore mark for the 11th consecutive month in January 2023, touching ₹ 1.28 lakh crore during the month, RBI data showed. HDFC Bank continued to maintain its leadership position in spends with a market share of 28 percent.

Asked about the delinquency level at HDFC Bank’s credit card business, Rao said that delinquency levels are well under control. “We are anywhere 30-60 percent lower than the number two player. We will be aggressive on the ground through product interventions, growth and distribution channels besides launch of digital products”, he added.

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