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HDFC is coming back for its lost market share in credit cards

Despite the 8 month embargo by India’s central bank, HDFC remains the country’s largest credit card issuer.

“As a leader in the cards space, we promised, we’d be back with a bang,” Parag Rao, group head of payments, HDFC Bank, said while announcing that the bank has issued a record 4 lakh credit cards since the Reserve Bank of India (RBI) lifted its embargo in August this year.

The central bank had barred HDFC from issuing new credit cards in December 2020 due to multiple glitches in the bank’s internet and mobile banking systems. With the embargo lifted, the bank plans to more aggressively push for digital payments.

Aggressive growth path set: HDFC

Following the lifting of the embargo, HDFC said that it wants to add five lakh new credit cards to its portfolio every month beginning February 2022. To achieve this rate, HDFC Bank has now revealed three new cards variants: Millennia, MoneyBack+ and Freedom. Two weeks back, the bank also announced that it is partnering with Paytm in offering co-branded credit cards. The launch of these cards is planned for October to coincide with the festive season and to tap into potentially higher consumer demand for credit card offers, the company said.

Despite the 8 month embargo, HDFC Bank remains the country’s largest credit card issuer, but other banks have gained significant market share over this period.

According to data provided by the RBI, HDFC Bank’s share went down from 1.53 crore credit cards to 1.48 crores between December 2020 and June 2021. Meanwhile, SBI Cards’ share went up from 1.13 crore credit cards to 1.2 crores and ICICI Bank’s share went up from 97 lakh credit cards to 1.1 crores.

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HDFC’s biggest competition in digital payments might however not be other banks issuing credit cards, but UPI. The transaction value on the Unified Payments Interface (UPI) stood at Rs 6.39 lakh crores in August 2021, up by 2.1x compared to the same month in the previous year, according to data released by the National Payments Corporation of India (NCPI). RBI’s strict new rules for recurring transactions using debit cards and credit cards also make them less attractive compared to UPI.

RBI’s ban on Mastercard, American Express, and Diners still in effect

The Reserve Bank in July barred Mastercard from onboarding new domestic customers in India onto its card network because of non-compliance with data localisation guidelines and earlier this year, it had barred American Express and Diners Club from onboarding new customers for the same reason.

While Mastercard said that it has now complied with the local data storage norms laid down by the RBI and has filed a new audit report on July 20, they are yet to get the embargo lifted. During this time, many banks shifted to Visa, including RBL Bank and Yes Bank, which used to solely rely on Mastercard.

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