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Home / Industry / Banking /  There is no slowdown in credit card spends, says HDFC Bank’s Parag Rao

MUMBAI : Private sector lender HDFC Bank Ltd has tied up with SAP Concur, a travel, expense, and invoice management solutions provider, and payments processor Mastercard for a corporate credit card for business travellers. In an interview, Parag Rao, group head for payment solutions and marketing at HDFC Bank said that the bank aims to target 5,000 corporates with this card and is not experiencing any slowdown in card spending at an aggregate level. Edited excerpts:

What is your customer acquisition strategy for this credit card?

SAP India has approximately more than 12,000 corporate clients and we intend to take this solution to those corporates. At the same time, HDFC Bank deals with close to 35,000 corporates and we intend to take the solution to them also. We will do it in a phased manner and use a top-bottom approach. The larger the corporate, the larger their spends on travel. It is about 8-10% of a company’s operational expenditure or opex, typically. One metric that we use is the number of corporates we would like to penetrate. In the next three years, we would like to target around 5,000 corporates. HDFC Bank has approximately 300,000 corporate cards today. Typically, we cover 11,000-12,000 corporates today with our corporate solutions.

What are your thoughts on the acceptance development fund (ADF)?

There have been discussions going on and those are still works in progress. The acceptance development fund is more about funding geographical expansion of the acceptance footprint at an institutionalized level. It is not really about merchant discount rate (MDR) but about how you get to a 10 million or a 20 million acceptance footprint.

Is the spurt in unsecured portfolios of banks a concern for the industry as a whole?

HDFC Bank’s predominance in the unsecured space is a planned strategy and our growth, the highest in the industry, is also a pre-planned strategy. We take care of the overall penetration, cherry-picking the right kind of customers and have an extremely strong credit underwriting net to take care of delinquencies. We do not see any issues or spurt in this space.

Are you concerned that cards are losing market share to other forms of digital payments?

We are happy because we see the overall payments ecosystem grow. As we have always believed, the number of form factors will increase and proliferate. Some will die out and some will settle down. My guess is that three to four form factors will exist and consumers will start adopting multiple forms of payments. In the short-term, you will see some displacements but overall, the payments ecosystem and each form factor is growing. We will soon come to a situation where most consumers will adopt multiple and simultaneous forms of payments depending on their comfort level.

Have you seen asset quality of credit card customers deteriorate because of the ongoing economic slowdown?

We have actually tightened our credit policy. We continue to believe strongly that headroom for good credit is still significant and we will continue our growth. At HDFC Bank, we do not see any rough weather. Moreover, at an aggregate level, we have not seen a slowdown in spends.

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