CIBIL Data – Retail Stress Increases in India

India’s Leading Credit Bureau – CIBIL data reveals that delinquencies across product levels in the retail segment have shown a modest increase but the situation is not alarming. The main segment which is under stress is auto loans, which is driven by CVs as evidenced in the latest results of banks.

Credit Card Segment – While the overall credit card balances grew by ~41% YoY to ~Rs1.1tn,
balances in the semi-urban and rural areas grew at a faster pace (+52% YoY) indicating increasing usage of cards as a payment option in these areas.

In the Personal Loan segment, the origination volumes more than doubled to 7.3m accounts out of which ~68% were Read the rest of this entry »

Credit Card Business set for Big Take Off in India

Credit Cards Spend in India is an evolving industry with >50mn base (~32mn unique customer base), >INR1tn loan outstanding (~1.2% of system credit) and 3% spends/GDP. Over the previous decade, while credit card spends posted ~25% CAGR, growth in the card base has lagged and remains low at ~32mn of unique customer base. Rapid proliferation of e-commerce, improving POS infrastructure and demonetisation were key inflection points for the credit card business.

Penetration of Credit Cards by CIBIL Score
CIBIL has 550 mn records (individuals plus businesses), of which the unique credit card customer base is mere 32mn — sub 6% penetration in credit cards. Moreover, Read the rest of this entry »

SBI Cards Business Model – SWOT Analysis

SBI Cards‘ outstanding card base has grown at a CAGR of 28% over FY15-FY2019 (vs industry CAGR of 22%) with market share of ~18% at Sep-19. With low credit card penetration in SBI customers, strong brand name and distribution, SBI Cards has potential to grow its card base at ~23% CAGR over the next 5 years leading to market share of ~22.5% by FY24. In this backdrop, we do a SWOT Analysis on the Business Model of the SBI Cards.

SBI Cards Strengths
The tutelage provided by SBI gives natural advantage to SBI Cards in growing its business. The advantages come in the form of brand, trust, access to vast customer base and distribution strength. For example: In FY19, 55% of the new customers were sourced from SBI’s customer base. With more than 20 years Read the rest of this entry »

Credit Cards – Under Penetrated, 4 Bn Dollar Profit Center for Next Decade

Over the next decade, the Indian domestic credit card sector offers an annual profit pool of $4bn (10% of banking sector profit), primarily driven by rising penetration (new customers) as the product segment remains highly under-penetrated. To put this in context, TransUnion CIBIL estimates that only 25% of the adult population in India is currently credit-active.

India currently has just 45.2mn credit cards outstanding compared to 931mn debit cards. CIBIL database indicates ~210mn customers having score of 700+ (prime / prime plus customers). Changing consumer behaviour/preference toward consumption/personal loans Read the rest of this entry »

The Business of Credit Card in India Today – Part 1

The credit card base has grown at a 18% CAGR during FY14-FY18, the current credit card base is only 45mn – this compares to 210mn customers with a 700+ CIBIL score (Super-Prime, Prime Plus and Prime), implying a 20% penetration and massive headroom for growth while staying on the same risk curve.

2 Big Credit Card Business Models in India The primary business model is centered on internal-to-bank customers (in practice at larger banks) while a secondary business model is emerging around new-to-bank customers (in practice at mid-sized banks). Large banks with a sizeable customer franchise grow their credit card portfolio purely as a cross-sell offering to their Read the rest of this entry »

ZestMoney and LazyPay – New Age Just in Time Loans for Millennials

Digital penetration has increased at a swift pace over the past few years in India. The decrease in average data cost and drop in price of smartphones has resulted in higher internet activity. This has promoted digital transaction and online purchases. PayTM, MobiKwik, etc. started the digital payment revolution and these platforms have expanded vertically. UPI has increased at a sharp pace in India. New entrants like PhonePe, Google Pay, etc. have increased digital payment adoption in the past two years.

ZestMoney‘s co-founders were inspired by the scope of digital lending in India while working in London. Urbanization and rising aspirations of Indian consumers, alongside the discount model of the online e-commerce industry, has fueled the swift pace of growth in online purchases. E-commerce is expected to Read the rest of this entry »