Card wars: StanChart says it's No. 1

ICICI Bank may have tipped Citibank to take the lead in the credit cards market, but Standard Chartered is convinced it is the numero uno "" based on credit card outstandings (or dues). The Indian credit card space has seen intense competition in the last couple of years so the top slot has its own halo.

StanChart says it has issued 1.78 million cards which have outstandings in excess of $350 million or Rs 1400 crore.

Industry sources said Citibank comes second on this score, though no confirmed figures are available.

ICICI Bank made headlines last fortnight when it said its number of cards issued had touched 3 million against the Citibank's 2.5 million.

StanChart comes third with 1.78 million cards, followed by State Bank of India with 1.5 million, HDFC Bank with over 1 million and HSBC at 0.9 million.

An analyst said it is not the number of credit cards that count, as these do not make much money for the issuing bank except for the annual fee.

Nor does the total card spend or average card spend per customer make any difference to the bank as such.

Rather, it is the revolving credit that customers maintain in the credit card accounts that is the money spinner for banks.

Revolving credit is the unpaid part of a card bill which attracts between 3 per cent and 1.49 per cent PER MONTH interest.

The recent "" and very successful "" cash-back card offers by Citibank and ICICI Bank do not seem to have rattled StanChart.

"Our Manhattan credit card offering customer total flexibility, has already crossed 50,000 cards, and we expect to meet our 1 million target," said the bank's CEO Chris Low.

Credit card spends and issuances have increased manifold with a series of promotional offers that took place during the 'festive' season of October-December 2004.

"We have seen a 30 per cent jump in average cash spends from our individual customer average of Rs 20,000 per annum," said HSBC head marketing, Sanjeev Patel. The card spend by the average customer is about Rs 15,000 in the industry, he added.

Banks are looking at offering customers greater value through promotional schemes. Reducing the monthly interest rate on revolving credit is also a means to enticing a customer to spend more on a particular card.

"We are looking at more usage programmes in the coming months in order to push spends onto our card," said Patel. This will not necessarily be through cash back schemes as these are not sustainable, he added.

According to Venture Infotek, a consumer payment processing company, the total spends in the credit card payment industry in 2003-04 was Rs 20,555 crore at merchant establishments. This reflected a growth of 28 per cent over the previous year.