20 lakh credit cards flushed out by March 31: Banks

Around 20.35 lakh credit cards will be flushed out of the system by March-end, according to a study done by Venture Infotek, India’s leading payment solutions provider. It has shown a sharp drop to 226.64 lakh cards by March-end, from 246.99 lakh cards as on March 2009, says the report titled ‘Payment Card Industry 2009’.

On the flip side, banks will increase their debit card count by 358.44 lakh cards to end the year with 1,732.75 lakh debit cards, says the study.

Leading the bandwagon to reduce credit card count is ICICI Bank, which will cut close to 15 lakh credit cards by the end of the financial year — to 55 lakh cards from 70 lakh as on March 2009.

The report, published annually, shows other leading banks too are reducing their credit card counts. While State Bank of India is slashing its credit card count from 27 lakh to 25 lakh, Citibank is reducing it from 25 lakh to 18 lakh. ABN Amro will reduce its card count from 13.05 lakh to 10 lakh while Standard Chartered will slash it from 13 lakh to 11 lakh by the end of present financial year.

“Banks have realised that it is not easy to run a credit card business in this country as losses for some of the leading players had peaked to almost 30-35 per cent in the past. Hence, most banks are reducing their credit card exposure,” said Abizer Diwanji, an executive director (banking) with KPMG.

While there is a sharp drop in the total number of credit cards, some banks such as HDFC Bank, HSBC, Barclays credit card, Axis Bank and Canara Bank are being gung ho about increasing their credit card portfolios. According to the report, around 9.77 lakh cards will be added by these five banks.

Interestingly, all banks have seen a surge in their debit card portfolios. “The industry is expected to add around 358.44 lakh debit cards by the end of the present financial year,” the report said. SBI, ICICI Bank, Axis Bank, HDFC Bank and Punjab National Bank are among the leading banks that are likely to see biggest surge in their debit card portfolios.

According to the head of cards with a leading private bank, the surge in debit cards is mainly on the back of a rise in the number of new accounts.

To drive their transaction banking business, Indian banks have been aggressive about adding ATMs in the country. All the 39 banks covered under the survey are together expected to increase ATM counts in the country to 58,850 by the end of March 2010.

“ATMs are expected to grow by 35 per cent during 2009-10 while SBI alone is expected to add close to 9,000 ATMs,” the report says.