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Business News/ Companies / Credit card losses high in India

Credit card losses high in India

Credit card losses high in India


Mumbai: Indian credit card business is seeing higher defaults than some of the developed markets, according to a study conducted by Edgar, Dunn and Company (EDC), an independent global financial services and payments consultancy. EDC conducted the study in January for India Cards Council or ICC, a body of all Mastercard issuing banks.

The credit card losses in India is Rs3,420 per active card per year against Rs3,070 in the US and Rs1,220 in Australia. Active cards are those that are used by consumers regularly for buying goods and services.

The EDC study involves 10 ICC banks in credit card and seven in debit card. The high credit loss could be linked to the very low acquisition cost for new cards, said an ICC release.

The cost of acquiring new card customers in India is Rs590 per card compared with Rs3,850 in US and Rs4,020 in Australia.

There are about 25.51 million credit cards in India, according to Reserve Bank of India data. ICICI Bank Ltd is the largest credit card issuer in India with around 8.5 million cards.

The percentage of active cards in banks’ portfolio in India is 56% against

80% in Australia and 75% in Singapore, the study said. It did not give comparable data of developing economies.

“Those geographies in which issuers normally charge annual fees to cardholders have a higher percentage of active cards in the portfolio,’’ said the study.

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Updated: 29 Apr 2009, 10:28 PM IST
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