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Credit cards outpace debit cards in FY17

While the credit cards grew by 57% year on year, debit cards grew 36.95%

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The pace of growth in credit cards was much higher than debit cards in 2016-17 due to aggressive marketing and reward points offered on the former. Bankers say demonetization also helped in the use and growth of credit cards.

While the credit cards grew by 57% by March 2017 over the previous financial year, debit cards grew 36.95% during the same period. Even though the percentage growth is much higher in credit cards, the total number of credit cards issued last fiscal is not as high as the debit cards.

The number of credit cards issued by banks increased by over 53.37 lakh in March 2017 over the previous year, while the number of debit cards increased by over 12.31 crore as more customers started migrating to electronic modes for transactions, especially after the demonetization.

Vijay Jasuja, chief executive officer of SBI cards, said, "We have added about 1 million cards last year and in May this year we have added 1.60 lakh cards. We have grown our card business very well through various co-branding activities and aggressive reward points on the various cards. The credit card culture is also being accepted by people."

State Bank of India, by its sheer size, is growing both its credit and debit cards. According to Reserve Bank of India data, SBI's credit cards have grown by 9.49 lakh while its debit cards have grown by over 95 lakh during this period. SBI adds about 1 crore savings accounts every year and every account is accompanied by a debit card.

Axis Bank grew its credit cards by 9.3 lakh and debit cards by 46 lakh, higher than that of ICICI Bank, the largest private-sector lender in the country.

Rajiv Ananad, executive director, retail banking, Axis Bank, said, "The credit cards have been growing due to the reward points and the focus on electronic modes of payment post demonetization. Not just the number even the spends on both the credit and debit cards have gone up."

ICICI Bank has grown its credit cards by 6 lakh cards and debit cards by over 42 lakh.

HDFC Bank has added the largest number of credit cards but added a much lower amount of debit cards in comparison.

Both ICICI Bank and HDFC Bank did not reply to emails sent by DNA Money seeking comment on their the credit card and debit card growth numbers.

In an analyst concall last month, Parekh Sukhthankar, deputy managing director, HDFC Bank had said that the bank is capitalising on the 38 million customer base. "The good thing for us is that across both our wholesale and retail businesses I think we are rather well-positioned between the geographical expansion, between the product range, between the digital initiatives, between changed processes and turnaround times," he had said.

N S Kannan, executive director,  ICICI Bank had said on May 3, after announcing the bank's results, "Growth in retail fees was driven by fees relating to debit and credit cards and distribution of third-party products. Retail fees constituted about 70% of the overall fees in the financial year. We would target double-digit growth in fee income in the financial year 2018, led by retail fees." The management added that the bank continues to grow the unsecured credit card and personal loan portfolio, primarily driven by a focus on cross-selling. The unsecured credit card and personal loan category grew by 39%.

In a year when the bank credit growth is at decade low of just 4.5%, banks have been on an overdrive to grow unsecured bank credit like the personal loans and credit cards to get some high-yielding assets to add to its margins. HDFC Bank, for example, started products like the Instant 10 Second Loan – a 10-second loan product for personal loans which has led to the high growth rate for the personal loan segments.

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