The Reserve Bank of India on Tuesday lifted the 9-month long ban on sourcing new credit cards while the restrictions on new digital business generation activities under Digital 2.0 initiatives will continue till further review.
“Yes, we lost customer market share in the last 9/10 months, but I am confident that we will regain and grow our customer market share and revenue market share in the time to come. We have the resources and plans in place to further reinforce our pole position in the credit card segment,” Jagdishan said in a letter to employees.
Jagdishan added that the bank will be back with a bang with a slew of new credit card launches lined up.
“With the lifting of the restriction on Cards acquisition, all the preparations and strategising that we have put in place to ‘come back with a bang’ will now be rolled out,” he said. “In the coming months, we will aggressively go to the market, with not just our existing suite of credit cards but also new offerings in the form of co-brands and partnerships.”
The RBI has asked the bank to submit a board-approved letter indicating continued compliance with its IT examination report. The bank has said that it will continue to engage with the regulator and ensure compliance on all parameters, so that the restrictions imposed on new launches of the Digital Business generating activities planned under Digital 2.0 could be lifted soon.
Jagdishan said that he was thankful for the ‘rap on the knuckles’ from the regulator which led to the bank re-imagining it’s IT systems & processes and turbo-charge the speed of technology transformation.
“We will not just ‘run the bank’ but also ‘build the bank’ as we go ahead, riding on Digital and Enterprise Factory with Infrastructure scalability, Disaster Recovery resilience, enhanced monitoring capabilities and security enhancements as the key pillars,” Jagdishan said in a letter to employees.
“In today’s day and time, there could be issues with technology, but we have started building an architecture that will ensure our systems bounce back quickly while ensuring minimal inconvenience to our customers and having multiple channels available for customers’ to complete the transaction.”
“The ban has come before the festive season which starts from September onwards in India, so the juggernaut can roll with full force and launch credit cards, attractive schemes within their ecosystem partners and be a force to reckon with,” said Suresh Ganapathy, associate director, Macquarie Capital.
As per Macquarie’s analysis,HDFC Bank lost nearly 180 basis points of market share as of May 2021 since end of November 2020 when the ban on launch of new credit cards came into effect. Their market share slipped to 24% while ICICI Bank and SBI Cards gained 130bps and 37bps to 17.4% and 19.2%, respectively.
The lender also has vast ground to gain and can easily capture back the space it lost after it added 36.5 lakh liability accounts from January to June 2021, 1.5-2 lakh credit cards per month pre-covid.
