Credit card issues are surging again

Mumbai, May 19 -- After witnessing continuous decline for the past four years, credit card issuance in India has shown a turnaround. Card issuance by banks and financial institution grew by 11% to 19.6 million in 2012-13 according to the Reserve Bank of India (RBI) data. From the peak 27.55 million in 2007-08, card issuance had fallen to 17.65 million in 2011-12.

Experts say that the companies are expanding market by reaching to customers in smaller cities and offering new products to them.

"We have adopted a focused strategy of targeting small towns and reaching out to SBI customers in these markets," said Pallav Mohapatra, CEO, SBI Card. "At the same time, our focus is on developing newer products targeted at specific customer segments."

Banks are also encouraging customers to use credit cards by offering rewards points, which fetch discounts for customers on the next shopping, on every purchase through cards.

Unlike the decline in the number of cards issuance, spending through credit cards continued to increase in the past five years. It rose 29% to Rs. 124,393 crore in 2012-13 from Rs. 96613 crore in previous fiscal.

Banks were aggressively acquiring cards customers till the end of 2007 but they became selective in issuing cards after the financial crisis hit the global economy in 2008.

Going forward consumers fascination with the money is expected to increase. "Issuance of credit cards in the current fiscal is likely to be more than the previous year," said a retail banking head of a public sector bank. "Banks are still cautious in selecting customers but they are going now moving to smaller towns."

Published by HT Syndication with permission from Hindustan Times.