India’s largest private bank HDFC Bank Ltd. is seeking to issue a million credit cards a month, a remarkable bounce-back for the lender after the country’s regulator banned it from taking on new card clients two years ago.
The bank wants to double the current pace of half a million new credit card issuances every month, according to Parag Rao, country head for payments business, consumer finance, digital banking and marketing. The firm will announce partnerships across a range of industries from online retail to food delivery in the coming weeks to increase spending on cards, Rao said.
The recovery for HDFC Bank has been swift since the eight-month long card ban was lifted in August last year, with the lender seeking to move past the punishment for repeated online glitches that hurt its customers. Reserve Bank of India data showed that the bank captured 29% of India’s overall spending on credit cards in October, the highest among its competitors.
“We focus not only on the issuance of cards which is a distribution game, but on deep engagement, ensuring customers find more value in their cards, and keep spending," Rao said in an interview.
The partnerships in the next few weeks also include two airlines and a large hotel chain, according to Rao. HDFC Bank is in the final stages of developing a new digital credit card to pull in younger customers, he added.
Banks in the world’s second most populated country are poised to benefit from the growth in online shopping where customers use their credit cards for purchases. Between 200 million and 300 million Indians are expected to spend $50 billion on online retail this year, according to a Bain & Co Inc. report.
Part of the push at HDFC Bank will be tied to its merger with Housing Development Finance Corp., which will give it access to the mortgage lender’s customers, Rao said. The two firms agreed to combine this year in one of the biggest global deals to ride a boom in home loans and consumer spending in India.
Beyond partnerships, the bank also wants to attract more customers who use credit cards from India’s local retail payment system known as RuPay, according to Rao. He sees recent rules that allow the linkage of RuPay credit cards to the widely used government-backed payment interface expanding the market for these cards.
“The credit lines for such customers will be small but these will be customers of the future, who can upgrade to other cards as they evolve," Rao said.
And while peers are offering rewards on a slew of products to gain customers, HDFC Bank is avoiding this strategy.
“We never have had the best discounts in the market nor do we want to be known as the card with the most discounts," Rao said.