RBI has lifted the ban onHDFC Bank from issuing new credit cards.- In December 2020, India’s apex bank had barred HDFC Bank from launching any digital services along with a ban on sourcing new credit card customers.
- The ban on launching any digital services or products continues for the lender.
In December last year, the RBI had barred HDFC Bank from launching any new digital products or services and issuing credit cards to new customers till the bank resolves its technical issues. The private sector lender was penalised for repeated instances of outages in its internet banking, mobile banking and payment utilities over the past 2 years.
Now after eight months, the RBI has lifted the ban on credit card issuance, but has kept the restrictions on all new launches of the digital business until further notice.
Shares of the bank gained 2% on Wednesday morning as investors cheered the move. At 1:15 p.m., on August 18, the stock was up 0.7% at ₹1,525.25.
“The restrictions on all new launches of the digital business generating activities planned under Digital 2.0 will continue till further review by RBI. We will continue to engage with RBI and ensure compliance on all parameters,” said the bank in a stock exchange filing on Wednesday.
Since the RBI had barred the bank from issuing credit cards to new customers, the lender made a strategy to sell credit cards to existing customers.
“In the credit card business, the RBI, through its order dated December 2, 2020, advised your Bank against sourcing new credit card customers. Your Bank subsequently recalibrated its strategy and began selling more to existing customers of the Bank. Credit cards constitute about 6% of the overall bank book,” said HDFC Bank in its annual report.
The strategy may have helped the bank to be the leader in credit card business. HDFC Bank continues to be the market leader with 1.48 crore outstanding credit cards as of June 2021, as per latest RBI data.
The second largest leader in this business is State Bank of India with 1.20 crore of credit card customer base as on June 2021.
Meanwhile, ICICI bank has buckled up its shoes and has been growing its credit card business since December last year. ICICI bank has increased its credit card base from 99.11 lakh in December to 1.10 crore in June. It has the third largest credit card customer base.
SEE ALSO: