RBI lifts ban: HDFC Bank may offer new credit cards

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The removal of HDFC Bank’s regulatory moratorium on the issuing of new credit cards would provide some comfort to the lender ahead of the holiday season. At the same time, the bank may face challenges as a result of the continued prohibition on new digital launches and the prohibition on three-card networks.

In a message to HDFC Bank workers on Wednesday, managing director and CEO Sashidhar Jagdishan is alleged to have remarked that the regulator’s “lap on the knuckles” has forced the bank to rethink its IT systems and procedures, as well as accelerate the pace of technological change.

Jagdishan stated “On Digital 2.0, the restrictions will continue till further review by the regulator. We shall continue to engage and ensure full compliance as we move forward,”, adding that HDFC Bank will regain and grow its credit card customer market share and revenue market share in the time to come.

Analysts see this as a positive move for the bank. According to a study released on Wednesday by Motilal Oswal Financial Services (MOFSL), The removal of RBI limitations ahead of the holiday season bodes well, and the bank is expected to become more active with credit cards in the coming months.

In a message to his coworkers, Jagdishan stated that HDFC Bank will aggressively go to market in the coming months with not just its existing credit card suite, but also new products in the form of co-brands and collaborations.

HDFC Bank has lost approximately 0.6 million cards since the ban began in December 2020, according to the MOFSL report. ICICI Bank, SBI Card, and Axis Bank, on the other hand, added roughly 1.3 million, 0.75 million, and 0.3 million new cards over the same time.

HDFC Bank said on June 30 that it has acquired a large number of clients on both the liabilities and assets sides. It intended to stick to its objective of targeting 75-80% of internal customers for the card base. These clients had been pre-approved, and the lender had been watching them for six months. These consumers are expected to be issued now that the issuance prohibition has been lifted.

The Reserve Bank of India’s (RBI) prohibition on new card issuances by three-card networks, on the other hand, might offer a fresh problem for HDFC Bank. HDFC Bank has 60 percent of its card schemes connected to Mastercard, American Express, and Diners Club International, according to a Nomura research dated July 15. The MasterCard network was used by the lender’s Millennia Prepaid Card, Regalia ForexPlus Card, and ISIC Student ForexPlus Card.

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