SBI cards set for Sri Lanka debut

The State Bank of India (SBI)-GE Capital joint venture is set to launch SBI Cards in Sri Lanka. SBI will be the first Indian bank to sell its credit cards overseas. At present, HSBC and Standard Chartered are present in the five-lakh credit card market in Sri Lanka.

According to sources, SBI has studied the market and is in the process of getting regulatory approvals for launching the product. SBI has a card base of around 1.4 million in India.

"Even though the Sri Lankan market is much smaller than India, the potential is immense as the number of cards in active use on a regular basis in Sri Lanka as a percentage of total cards issued is two-and-a half times higher than in India. Besides, the spend per card in Sri Lanka is also higher than India," a source said.

On an average, a credit card holder in India spends between Rs 1,500 and Rs 2,000 per card per month. Total number of credit cards in force (CIF) in India were between 8.75 and nine million in December.

Both Citibank and ICICI Bank claim to be the number one player with over a two million card base. Standard Chartered has a 1.5 million card base, while HSBC issued around seven lakh cards.

These five collectively account for about 71 per cent of the market. Among the rest, HDFC Bank, the latest entrant, has acquired a card base of over 4 lakh and ABN Amro around three lakh.

ICICI Bank has taken the product to 67 cities and SBI Cards is present in over 40 cities. Standard Chartered is present in 18 cities and Citibank in 30 cities.

The Visa and MasterCard data available for 2002 show Japan has 1.12 billion cards, followed by China 1.1 billion and South Korea 64 million.

However, these numbers are inclusive of credit and debit cards. In India, the comparable number in 2002 was 12.86 million. Now, it could be around 24 million as debit cards have already overtaken credit cards.

The Indian credit card industry has been witnessing around a 31 per cent compounded annual growth rate.

On account of over-aggressiveness of the players, the default rate in credit card business has been increasing. It was to the tune of 8.75 per cent in October 2003 "" much higher than 6.5 per cent in 2001.