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MUMBAI : ICICI Bank Ltd seems to have made the most of the nine-month period when private sector peer HDFC Bank Ltd was barred from issuing new cards by the banking regulator.

ICICI Bank issued 1.5 million new credit cards between December 2020 and August 2021, the most by any lender, according to Reserve Bank of India (RBI) data.

In August, ICICI added 219,084 credit cards, followed by SBI Card with 162,587 and Axis Bank at 82,619.

In December, RBI had barred HDFC Bank from issuing new cards till the glitches on its e-banking portal were fixed.

HDFC Bank, India’s largest credit card issuer, has issued more than 400,000 new cards since the embargo was lifted on 17 August, it said recently. The numbers will be collated by RBI when it releases the next set of data.

“Quite obviously, over the last nine months of the embargo, we lost market share in the number of credit cards as we stopped sourcing. Over the next three to four quarters, we will gain back our market share," Parag Rao, group head, payments, consumer finance, digital banking and information technology, HDFC Bank, said on 29 September.

Earlier, Rao had said that the bank hit the milestone of issuing 300,000 new cards in November 2020 and plans to reach the pre-ban run rate within three months. It aims to add 500,000 credit card customers every month for the next two quarters.

Credit card is a risky portfolio for banks because of the unsecured nature of the product, but it fetches a higher rate of return. Credit card customers can broadly be classified in two groups based on repayment schedules: transactors (those who pay the outstanding amount by the due date) and revolvers (customers who pay a part of the dues to avoid default). Credit card companies earn more interest from the second category of customers.

The credit card market is buzzing with activity in the run-up to the festive season, with banks rolling out new offers targeted at millennials.

Credit card issuers are offering discounts and cashbacks to prod cardholders to spend more on online shopping during the festivals.

SBI Card launched a three-day festive offer starting 3 October, when customers get a 10% discount on all purchases made on domestic e-commerce sites.

“We have observed that an increasing number of our cardholders are shopping online across a wide range of platforms and product categories, especially during the festive period," said Rama Mohan Rao Amara, managing director and chief executive, SBI Card.

Mint reported on 4 October that banks rolled out new features and offers on cards as they expected an increase in credit card usage in the run-up to the festivals.

Lenders were cautious on unsecured loans, but continue to make calculated bets on the credit cards business.

The enthusiasm on the part of banks also comes at a time when buy now, pay later (BNPL) products have caught the fancy of customers, especially the youth. BNPL essentially offers around 15 days of interest-free funds to small borrowers.

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