New Delhi: ICICI Bank Ltd, India’s largest private lender, plans to issue 500,000 new credit cards in 2013-14 buoyed by an increase in spending using credit cards and low delinquency or non-repayment rates.
From 3.19 million in June 2011, ICICI’s outstanding credit cards have dropped to 2.95 million as of June, according to data on the Reserve Bank of India’s (RBI) website.
Rajeev Sabharwal, executive director at ICICI Bank, said the bank plans to add “half a million” credit card customers, mainly by offering cards to existing account holders, by March. “We are seeing spending growth of 20% or more, varying between Rs.1,300 crore to Rs.1,500 crore every month. Our delinquencies are less than half of the industry and 90% of our cards are actively used,” Sabharwal said, adding that ICICI’s delinquencies had fallen “dramatically” over the past few years. Sabharwal declined to give a specific number on the delinquencies citing compliance issues.
Suresh Ganapathy, head, financial research team, at Macquarie Capital Securities (India) Pvt. Ltd, said tapping existing clients is a “low-hanging fruit” for ICICI.
“They are targeting existing liability customers and are not in the race to compete with banks like HDFC Bank Ltd in terms of numbers. In times like this when economic growth is slowing, the growth in credit cards may not match the peak levels but banks like ICICI can hope to fill the vacancy created by a lot of foreign banks which have exited this space,” Ganapathy said.
HDFC Bank is the largest issuer of credit cards in India with 5.94 million customers.
ICICI Bank’s total credit card loan book stands at Rs.3,000 crore, up from Rs.2,500 crore in March 2012. Sabharwal said that the customers’ credit card spending per month was 50% higher than the industry average of Rs.55,000 per customer.
“Ninety five percent of our credit cards are fee-based and over 90% of our total cards are actively used. Our delinquencies are down due to strict credit structures, helps from credit bureaus and offering cards mostly to existing customers,” Sabharwal said.
Data on RBI’s website shows that the number of outstanding credit cards had dropped to 19.1 million in June from a peak of 27.5 million in 2007-08.
“Online spends have grown quicker at 30% and we have seen that cards are mostly used for travel-related and fuel purchases,” Sabharwal said, adding that unsecured loans, including from credit cards use, are unlikely to rise from 1.5% of the bank’s total loan book.