rbi: Bank card numbers proceed to slide after RBI’s deactivation order

The Reserve Financial institution of India (RBI) order on discontinuing inactive bank cards continued to negatively influence the business dimension, with top-tier lenders resembling , and seeing a decline within the variety of energetic bank cards.

Personal lender HDFC Financial institution continued to be the worst affected, with whole playing cards in power down by 1.6 million month on month. Bankers say whereas the overall bank card numbers will normalise quickly, they’re additionally seeking to change the technique with regard to onboarding clients.

“It is in regards to the clear intent to make use of the cardboard,” mentioned Parag Rao, nation head – Funds, Client Finance, Expertise and Digital Banking, HDFC Financial institution. “It is also time the place charges want to return again as a result of something you get at no cost, you do not use. It is really time to get again charges as a result of clients actually see true worth solely after they pay for one thing.”

Rao added that the general business might see a drop of 8-9% in whole bank cards in power.

The central financial institution’s rule states that if a bank card has not been used for multiple yr, the method to shut the cardboard shall be initiated after intimating the cardholder. If no reply is obtained from the cardholder inside 30 days, the cardboard account shall be closed by the card-issuer, topic to cost of all dues. The RBI rule got here into impact in July.

Though the downward development continued in September, the autumn was much less steep than in August. Whole bank cards fell by 0.3 million in September as in comparison with 2.3 million in August. Whereas whole bank cards have been round 80.3 million on the finish of July, it dropped to 78 million in August and 77.7 million in September.

On a person foundation, HDFC Financial institution deactivated round 2.4 million playing cards throughout Q2FY23 which have been inactive for a sure interval and on the similar time added 1.2 million new bank cards, taking its card portfolio to round 16.3 million. HDFC Financial institution can be shedding market share in playing cards excellent portfolio and has misplaced round 200 bps within the final yr, down from 23% in September 2021 to 21% in September 2022. In September, Axis Financial institution deactivated 1.1 million bank cards whereas ICICI Financial institution closed 0.4 million playing cards.

“The variety of new bank cards added to the general card portfolio continued to stay detrimental for the second consecutive month, down by 2.6 million in two months,” mentioned Bunty Chawla, analyst with IDBI Capital.

“We anticipate the development to proceed for some extra time led by gamers reporting the deactivated playing cards particulars.”