Credit card biz slumps as slowdown pinches
The credit card industry, which has been witnessing a steady growth of 30 per cent annually for the last few years, is set for a deceleration in 2008-09, reports Mahua Venkatesh.india Updated: Dec 21, 2008 20:31 IST
The decline in cold-calling of customers to sell more credit cards is beginning to tell on industry growth.
The credit card industry, which has been witnessing a steady growth of 30 per cent annually for the last few years, is set for a deceleration in 2008-09. For the first time in eight years, growth rate has dropped to 15 per cent in the current year, thanks to the economic slowdown, say industry executives.
There are 3 crore credit card holders among one billion — 100 crore — people “We still have a very low base and a deceleration of growth may impact the industry adversely,” Vijay Mehta, director, Credit Card Management Consultancy, told Hindustan Times.
A senior Citibank official said that the company has decided against hard-selling and the number of “cold” calls that used to be made earlier has reduced significantly. “There has been a conscious attempt to reduce the number of calls for selling the product and naturally there will be dip in sales,” the official said, adding that the focus was now on usage.
The number of direct selling agents, hired by card issuers and banks has also reduced, industry executives said.
ICICI Bank and SBI Cards, a joint venture between the State Bank of India and GE Money, have also seen a growth slump. An executive at SBI Cards echoed the sentiments. “The point is not to increase sales. At this point recovery is most critical,” he added.
In India, usage of plastic money is still abysmally low. “The card issuers must assess the credit worthiness of the customers and they should try and increase usage of the existing cards,” CCMC’s Mehta added.