Credit Card lending is the most profitable business vertical of Indian Bank / Financial services company. High profitability is driven largely by the high yielding unsecured credit business. While share of fee income is high in total revenues (~50% of total income net of interest expenses), most of the fees (penalties, etc.) are credit-linked. The credit card penetration in India is quite low at 62 Cards per 1,000 working people.
Fees such as annual subscription charges are also largely recovered from customers that are borrowers or who have very low spending. The affluent customers, normally the transactors, account for most of the spending and help the credit card issuers screen as a potent marketing channel to manufacturers / traders. This enables the credit card issuer to