"While HDFC Bank continues to be the largest issuer of credit cards in the country, its share in the issued card base fell from 33 per cent to 27 per cent in FY14," Worldline, a payments and transactional services industry player that is a subsidiary of Atos, said in a report.
The fall in HDFC Bank's share comes as the industry grew 4 per cent for the second consecutive year in 2013-14. As of November 2013, there were 18.7 million credit cards in the country, according to Reserve Bank of India data.
HDFC Bank's rivals including ICICI Bank, Axis Bank and State Bank of India increased their share by 2 percentage points during the period, according to the report.
Private sector banks, including foreign banks, led the market in FY14, with a 54 per cent share of the overall credit cards in circulation.
The top five players controlled the credit card market with 14.68 million cards out of 18.7 million, according to RBI data of November 2013.
HDFC Bank had 5.13 million cards, followed by ICICI Bank with 3.09 million, SBI in third slot with 2.76 million, followed by Citigroup with 2.4 million and Axis Bank with 1.31 million cards.
"After the Reserve Bank's recent EMV mandate, there was an uptick in issuance from the public sector banks, as a result of which their share has grown to 20 per cent from 18 last year," the report added.
However, the report said the growth rate is likely to be slow in the short term as large issuers focus on profitability and continue to weed out cards with lower activity.
In terms of debit cards, over 58 million were added in FY14, with SBI continuing to lead.
"The debit card base now stands at 389 million, a 17 per cent growth over the previous year and a CAGR (compound annual growth rate) of 21 per cent over the last five years," the report said.
Public sector banks remained the largest debit card issuers and increased their share over last year by 2 per cent.
"This share is unlikely to change in the near term," the report said.
SBI, which has 15,000 branches, continues to be the largest debit card issuer, with a third of the market share.
Meanwhile, the point-of-sale (POS) terminal base crossed the 1-million mark during the report period.
After a sluggish four-year period, the POS terminal base grew more than 74 per cent in the past two years. The share of public sector banks in the POS terminal space increased to 21 per cent from 6 per cent.
SBI has been one of the primary contributors to this growth in POS terminal base. In terms of market share by banks, SBI has grabbed a full 13 per cent share in the past two years and this is likely to exceed 20 per cent in the next year, the report said.