Cautious banks block 1 crore credit cards

source : ET :18 NOV, 2011, 02.22AM IST, GAYATRI NAYAK & ANITA BHOIR

MUMBAI: About one crore credit cards have been blocked or withdrawn from the Indian banking system since the global financial crisis of 2008 as lenders become increasingly cautious to protect against potential delinquencies. At the same time, the total number of transactions through debit cards has outpaced the number of credit card swipes, though in value terms credit cards account for larger spend. 

According to data released by the Reserve Bank of India, the number of credit cards in the system has fallen nearly 36% to 1.76 crore as on September 2011, from 2.75 crore as on March 2008. 

"They (banks) have increasingly become more stringent and have started undertaking more rigorous credit checks," said Kadambi Narahari, chief executive officer, SBI Cards, one of the leading credit card players in the country. 

Also, lenders have started seeking additional credit information through credit bureaus before issuing new cards, he said. The stringent checks and balances have led to a decline in outstanding payment on credit cards, which stood at 24% of total card spend at end of fiscal 2010-11, against 43% in fiscal 2008-09. 

"Post 2008 crisis, banks have turned cautious in sourcing new business to avoid huge delinquencies erode their profit and loss," said Parag Rao, head - credit cards, HDFC Bank, the largest issuer of credit cards in India.