It is an area where Indian banks had rarely ventured in the past but the concept of credit cards for the uber-rich is fast gaining popularity among local lenders.
Superior credit quality, large ticket transactions, and the opportunity to get high-profile clients have made ultra-premium cards a necessity in private banks’ product portfolio.
These cards were a forte of foreign lenders such as American Express Banking Corporation, Citi, Standard Chartered Bank, and Hongkong and Shanghai Banking Corporation till mid-2010. But Indian banks have now started gaining market share in this business. Axis Bank and HDFC Bank were among the first domestic banks to enter this space.
Axis Bank introduced ‘Privee Infinite’, a credit card for its high net worth customers, in November, 2010.
Almost a year later, HDFC Bank, the largest credit card issuer in the country, launched ‘Infinia’, a by-invitation-only credit card, with no spending limits. It positioned Infinia as a direct competition to Amex’s high-end cards and strengthened its portfolio further with follow-up launches — Regalia, Superia and Platinum Edge. “We want to offer our customers all possible banking products. This strategy prompted us to launch Infinia and other premium cards. The HNI (high networth individual) is an important and growing business segment. Their numbers may be small but they generally spend more,” said Parag Rao, senior executive vice-president and head of credit cards at HDFC Bank.
The bank now claims to be the largest in the premium and super-premium credit cards business in India. According to rough estimates by bankers, wealthy individuals account for 25 per cent of the total cardholders in the country but their share in total spends is estimated at 65-70 per cent.
While ICICI Bank, the largest private lender, continues with its strategy of cautious unsecured lending (including credit cards), it launched its first super-premium credit card ‘Diamant’ for private banking clients last week. The bank had also launched a couple of premium cards, Sapphiro and Rubyx, earlier this year.
“Our strategy is to deepen the relationship with clients and expand the product offering to meet the financial needs of customers. There are different ways of getting a client into the bank’s family. This (super-premium cards) is certainly one of them. Delinquency is hardly there. The average spend is also three-four times more than mass segment cards,” said Rajiv Sabharwal, executive director and head of retail banking at ICICI Bank. Even IndusInd Bank that entered the credit card market only in 2011, by acquiring Deutsche Bank’s portfolio, is likely to introduce an ultra-premium credit card soon, a top official of the bank said.
Bankers agree Indian lenders have made a delayed entry into this space. A limited client pool, lower returns and the affluent Indians’ preference for global brands made them hesitant.
“The HNI segment is a relatively small but growing segment in India. Customers in this segment are defined by the banking relationships they share with us. Typically, such clients will not only be a credit card customer but will have two to three different banking relationships with us. All these factors have made this segment very attractive for banks in India,” said Muge Yuzuak, managing director and head of payment products at Citibank in India.
Bankers also felt HNIs are no longer “excessively brand conscious” and choose their cards based on reward programmes and convenience.