The foreign banks in India have lost market share in credit card in comparison to domestic banks.
The number of credit cards issued by American Express, HSBC India, Standard Chartered Bank, DBS Bank India and SBM Bank India fell by 7.1% year-on-year to 3.99 million at the end of June. Together, these five foreign banks lost around 304,000 cards during a period when the overall Indian credit card industry added 10.6 million cards.
As a result, their combined share of total credit cards in India declined to 3.29%, from 3.88% a year earlier. In comparison, India’s total credit card base grew 9.6% to 121.6 million during the same period.
Foreign Banks Focus on Premium Customers
As per market experts, foreign banks are focussing more on premium customers and efforts to reduce less profitable card portfolios.
Foreign banks appear to be giving more importance to profitability rather than simply increasing the number of cards. Higher-income customers generally spend more, which allows banks to generate higher spending per card even with a smaller customer base.
Domestic banks have large retail customer bases and wider branch and distribution networks. They are also using digital platforms and partnerships with other brands to aggressively acquire new credit card customers.
For example: Axis Bank and SBI have partnership with Flipkart for credit card. ICICI Bank has partnership with Amazon. Google Pay is also now providing SBI credit cards – The Google Pay Flex SBI Card. It is a co-branded digital credit card available on the RuPay and Visa networks. It offers instant reward “Stars” (1 Star = ₹1), flexible EMI conversions, and UPI linking directly inside the Google Pay app.
Due to these partnerships, the number of credit cards of domestic banks have increased rapidly in India.
Standard Chartered and DBS See Sharpest Decline
Standard Chartered Bank and DBS Bank India recorded the biggest declines among the five banks. Standard Chartered’s credit card base fell 28% to 581,000 cards, a decline of about 227,000 cards. Its credit card spending also fell nearly 18% to ₹693 crore in June. DBS Bank India’s credit card base declined 29% to 310,000 cards. Spending on its cards also fell 18% to ₹338 crore.
American Express Sees Higher Spending
American Express reduced its outstanding credit cards by 7.5% to 1.301 million. However, spending through its cards increased by more than 16% to ₹5,927 crore.
Although American Express accounted for only about 1% of the total credit cards in India, it accounted for 2.94% of the industry’s total credit card spending. This shows its strong presence among high-spending customers.
HSBC and SBM Bank Add Cards
HSBC India was one of the banks to increase its card base. Its outstanding credit cards grew 3.5% to 980,000. However, spending through its cards declined nearly 10% to ₹1,729 crore.
SBM Bank India recorded stronger growth in the number of cards, with its card base rising 17.6% to 828,000. Despite the increase in cards, spending declined by around 14% to ₹53 crore.
