Mastercard ban: These 7 lenders are going to be hit hard by RBI's decision

Among credit card issuers including co-branded partners, RBL Bank, YES Bank and Bajaj Finserv lending will be most impacted, says Nomura

The Reserve Bank of India's (RBI) restrictions on Mastercard from issuing new cards will hit six banks and one non-banking finance company the most, as these lenders issue a large proportion of credit cards with the payment system operator.

All the credit cards issued by YES Bank and RBL Bank are in the Mastercard platform. Bajaj Finserv, has co-branded cards with RBL Bank and also issues cards with Mastercard as payment system operator.

RBL, in a statement on Thursday, said its run rate of issuing 100,000 cards a month ‘could potentially be impacted’ due to curbs on Mastercard. RBL has entered with an agreement with Visa on Wednesday though the technology integration will take 8-10 weeks.

“Among credit card issuers including co-branded partners, RBL Bank, YES Bank and Bajaj Finserv lending will be most impacted, in our view, as their entire card schemes are allied with Mastercard,” Nomura said in a report.

HDFC Bank has 60 per cent of its card schemes tied to Mastercard, Amex and Diners, while for Axis and ICICI this is about 35-36 per cent,” the report said.

YES Bank is another private sector lender which has been issuing credit cards only with Mastercard. In the last four months, YES Bank has added almost 90,000 cards in its kitty. “For new Credit card issuance, the Bank [Yes] is evaluating migration to other platforms for seamless transition,” the bank said in a statement to Business Standard.

HDFC Bank – the country’s largest credit card issuer with close to 15 million cards – issues 45% of its cards in the Mastercard platform.

Reserve Bank of India had barred HDFC Bank from new credit cards since December 2020. As a result, the largest private sector bank’s credit card base declined from 15.38 million in November to 14.85 million in May following the ban. HDFC Bank was adding around 200,000 cards every month before the ban.

ICICI Bank has become aggressive in the credit card segment in recent times as the private sector lender has been issuing 150,000 to 200,000 credit cards in each of the last four months. Almost 36 per cent of the ICICI Bank credit cards are issued with Mastercard. ICICI Bank is the third largest credit player in the country, having a card base of close to 11 million, according to latest RBI data.

Axis Bank – the third largest private sector lender and fourth largest credit card issuer – issues almost 35 per cent of the cards with Mastercard. Axis Bank, which has seven million credit cards, issued around 100,000 cards in February and March though the figure fell to 50,000 in April.

Among major credit card players, SBI Card is the least dependent on Mastercard as only 10 per cent of its cards are on such a platform. TATA Card – a co-branded credit card of SBI Cards and Tata Capital – only issues cards as Mastercard as the payment system operator. SBI Card is the second largest card issuer in the country with over 11 million cards. SBI Card issue around 1 lakh cards every month.  

In India, there are more than 62 million credit cards, as of May 2021. Sources said, over 50 per cent of the market share is captured by Visa, while Mastercard has about 30-35 per cent market share. Credit Cards are mostly issued with Mastercard, and Visa though public sector banks who are not a significant player in the credit card market – also issues home grown Rupay card of National Payments Corporation of India (NPCI).