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Foreign Banks Lose Ground in India's Credit Card Market
24 Aug
Summary
- Five foreign banks saw their credit card base drop significantly.
- Domestic lenders are gaining market share from foreign banks.
- Foreign banks are prioritizing profitability over card volume.
As of June, the combined credit card base of five foreign banks in India, namely American Express, HSBC India, Standard Chartered Bank, DBS Bank India, and SBM Bank India, contracted by 7.1% year-on-year. These institutions collectively lost 304,000 cards during a period when the broader Indian credit card industry experienced substantial growth, adding 10.6 million cards. Their overall share of outstanding credit cards consequently decreased to 3.29%.
This contraction aligns with a strategic shift observed in preceding months, where foreign banks have prioritized portfolio rationalization and focused on premium customer segments. This emphasis is driven by a goal to maintain profitability and higher spending per card, even with reduced portfolio volumes. This strategic pivot allows them to sustain elevated spending levels by targeting high-income customers who exhibit stronger spending behavior.
Industry experts suggest this trend signals foreign banks are ceding the volume-driven credit card market to domestic lenders. Domestic banks benefit from extensive retail customer bases, wider distribution networks, and aggressive digital and co-branded card acquisition strategies. Standard Chartered and DBS Bank India recorded the steepest declines, with their card bases falling by 28% and 29% respectively in June. Amex also saw a 7.5% reduction in its outstanding cards, though its card spending increased significantly.
