HDFC Bank issues 400,000 credit cards after regulator lifts embargo

The record issuance is as of September 21, 2021, and marks the aggressive growth path the bank has embarked on post the embargo

Private lender HDFC Bank has issued 400,000 credit cards since the embargo imposed by the Reserve Bank of India (RBI) was lifted in mid-August, surpassing the milestone it had set to initially get back to its pre-embargo run rate of issuing 300,000 cards per month.

The record issuance is as of September 21, 2021, the bank said. The lender had previously said its target was to issue 500,000 credit cards a month beginning February 2022, and regain its lost market share in the outstanding credit cards in the next 3-4 months.

Pre-embargo, HDFC Bank had a market share of 25.6 per cent in the outstanding credit card market, which dropped to 23.2 per cent in July. As of July, HDFC Bank had 14.76 million credit cards in the market compared with 15.38 million, pre-embargo.

“Over the last nine months of the embargo, we did lose market share in numbers because we had stopped sourcing. One of the ideas to get back the market share was to significantly ramp up acquisition post the lifting of the embargo to make up for lost time. So, over the next 3-4 quarters, we will gain back market share and increase our value market share”, said Parag Rao, Group Head-Payments, Consumer Finance, Digital Banking & IT, HDFC Bank.

“As a leader in the cards space, we promised, we’d be back with a bang. We are now pushing the pedal not only to acquire new customers but also to enhance offerings of our existing cards”, he added.

Having said that, Rao emphasised that there will be no dilution of credit norms from the bank’s side. “HDFC Bank will always be a very prudent lender and continue to be very conservative in our credit standards and I do not expect a change in our credit stance”, he said.

The bank continues to source a significant number of liability customers, which will form the base for cross-selling of credit cards. Almost 80 per cent of the new acquisition will be from the bank’s own liability customers and the rest will be open market customer acquisition. The bank already has a 60-million liability base available with itself, which it can tap into.

After RBI lifted the embargo, the lender has been focusing on four key strategies -- updating existing products, launching new products for segments where they are not present currently, strategic alliances and partnerships and consequently growing the market, and creating a very superior customer experience.

Compared to other electronic payment forms, the credit card market is highly underpenetrated hence there is plenty of headroom to grow. And, the market has seen the entry of several new players in the past few months.

Rao said there is a whole new set of customers coming in who are all electronically savvy, and are hence very important target segments for credit cards. Another focus area to grow will be semi-urban geographies as credit cards have typically been a metro city product.

“In the past few years, there has been a significant ramp-up by all the players. We have moved from 30 million to 60 million cards in the past 3-5 years. Also, the new cards issued on a monthly basis are crossing 1 million now. Very soon we will cross the 100 million mark in credit cards”, Rao said.

Recently, HDFC Bank partnered with Paytm to offer co-branded credit cards on the Visa platform. The main reason to forge strategic alliances with partners is to enter segments of consumers where the bank may not have been present or may not have had a strong presence, the bank said.

The bank last month said it has over 20 initiatives that will come to the market in the next 6-9 months, which include co-branded cards with corporate India spanning pharma, travel, FMCG, hospitality, telecom, and fintech.

Meanwhile, ahead of the festive season, the bank announced the relaunch of three cards -- Millennia, MoneyBack+ , and Freedom -- which have been reinvented to put more power into the hands of the customers, by adding a host of new features and benefits. The new card variants will be available to customers from October.

“Our strategy to re-invent, create and co-create has been crafted based on the analysis of customers’ buying behaviour, the categories they spend on, and the spend patterns. The months that we have spent sharpening our strategy are now bearing fruit. We are ready to unveil best in class offerings and experience to our customers, just in time for the festive season”, Rao said.