Credit card is the most profitable business for any bank or lender. The reason: credit card interest rates are very high, in fact, at or above 25 percent, which makes it one of the most profitable businesses for any lender, public or private sector.

Within the credit card segment, HDFC Bank is the market leader with the highest share, while City Union Bank’s share is the lowest. With a 23.61 market share, HDFC Bank has been able to maintain its leadership status despite the ban from the Reserve Bank of India from issuing any new credit cards in the last eight months.

SBI Card’s share is at 19.17 percent, while ICICI Bank comes at third with a 17.57 percent share.

The top four credit card players have a huge market share of 71.71 percent in the Indian credit card market, while the rest, i.e., 28 banks, have a market share of less than 5 percent each.

In fact, the share of the top four players may rise further as market leader HDFC Bank aims to make up for the 8-month loss. It plans to issue up to 300,000 credit cards from next month which will be scaled up to half a million in the coming months, Parag Rao, Group Head-Payments at HDFC Bank said in a press briefing on Monday.

“We have significant headroom to grow...our conservative approach to credit will continue,” Rao added as the bank's predominant focus on offering credit cards to its own bank customers will continue.

Overall, the penetration of credit cards remains low in the country as they form around 6.5 percent of the total cards, including debit and credit cards, issued by lenders.

A key metric in credit cards is per card spend and what may surprise everyone is that HDFC Bank is not the market leader here. It is Karur Vysya Bank, which leads per card spend in India.

In fact, Karur Vysya Bank’s per car spend is over 2.17 times the industry average and more than 1.83 times of the market leader HDFC Bank.

From Karur’s point of view, it is the most profitable business.

Private lender IndusInd Bank also derives significant business out of its credit card segment, followed by the latest kid on the block in the banking sector i.e. IDFC First Bank!

(Edited by : Ajay Vaishnav)

First Published:Aug 24, 2021 2:06 PM IST