SBI Cards and Payment Services Ltd, India’s only listed credit card issuer, plans to restructure fewer outstanding loans this fiscal year compared to last year despite widespread unrest caused by the second wave of the pandemic .
Rama Mohan Rao Amara, CEO of SBI Cards, also said in an interview that credit card spending is expected to start picking up from June with the easing of covid-induced lockdowns in many states leading to a recovery. gradual demand.
While SBI Cards restructured nearly 9% of its outstanding loans last year as part of the one-off restructuring authorized by the Reserve Bank of India, the scenario is significantly better this year despite the second wave of covid-19, Amara said.
“According to RBI, each lender will have to make a restructuring policy available. Those whose income is affected will opt for this scheme. We will be selective. Our approach is customer-specific, ”he said, adding that“ wherever we see temporary depreciation, we offer some form of restructuring. Where we see a permanent depreciation, we propose a settlement ”.
The credit card division of India’s largest asset lender, State Bank of India, reported a 5% drop in retail spending in the March quarter and expects it to remain low until June given the lockdown in many states. SBI cards have lost 2.5 percentage points of market share in spending over the past three months.
“Demand-driven discretionary spending has taken a back seat. Department stores, pharmacies, etc. these categories continue to be strong, “Amara said. However, he said the situation was” not as bad as in the first quarter of last year “.
“I think the situation will not improve very quickly from July. The green shoots will be there from June, ”he said.
Amara said that after experiencing a drop in spending around the first quarter of last year, when India was under a strict nationwide lockdown, it started to revive once the lockdown was lifted. . Spending, however, began to decline in the March 2021 quarter with the start of the second wave. This was also the period when the Reserve Bank had banned HDFC Bank from issuing new cards.
Private sector rival ICICI Bank took the opportunity, capturing 43% of additional cards issued by banks between November 30 and February 28. SBI Cards failed to take full advantage of the absence of HDFC Bank. Amara however claimed that maintaining a high market share in spending is more important than having a high market share in credit cards.
SBI Cards total card spending was ₹35,943 crore for the March quarter, up 11% from a year earlier, which was lower than the pre-pandemic period.
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