The Indian Express in an interview. Excerpts :
The credit card business is witnessing a resurgence. What is driving this surge
I would attribute this trend largely to the growing Indian middles-class and consumerism. In my opinion, payment innovations such as EMI at POS are facilitating favourable spend behaviour by offering flexible payment options.
What is the role of zero-interest EMI option in boosting credit card use Who will be responsible in the case of defaults
EMI at POS enables manufacturers and retailers to sell smartphones and consumer durables under monthly installment schemes without their taking any credit risk or the buyer bearing any interest cost. In the case of EMI at POS, the merchant or the manufacturer bears the interest burden but if the cardholder defaults, the risk is borne by the credit card issuer. In our portfolio, customers using the EMI facility is increasing steadily. We had recently launched the Convert2EMI programme. Under this, our cardholders have the flexibility to avail attractive EMI offers at over 3,000 outlets comprising 50 unique merchants across different categories such as consumer durables, electronic goods, mobile phones, travel, and health and wellness. We are seeing an increasing trend among our cardholders in availing these attractive EMI options.
What are the lessons learnt by card issuers in the last five years
The credit card industry has been going through a maturing phase over the past 2-3 years and is now back into the growth phase. Credit card issuing companies, banks as well as customers are today a lot more aware and actions by all stakeholders are far more deliberate and responsible. We have started undertaking more rigorous credit checks, besides seeking additional credit information through credit bureaus for informed decision making, prior to issuing new credit cards. With the emergence of credit agencies, card issuers now have access to complete information of the applicant prior to issuing a card.
Where does SBI Cards stand in this business
We are on a strong growth trajectory. We have registered a year-on-year steady growth both in terms of spends and cards-in-force numbers. As on May 2013, our total cardholder base was 2.6 million. In fact, as per the May 2013 RBI report, we are the third largest issuers of credit cards in the country today.