Kotak Mahindra plans to ramp up credit card business, more launches on the anvil, says top executive

Credit card spending hit a record high of Rs 1.4 lakh crore in May 2023, the latest data from the Reserve Bank of India (RBI) showed.

Kotak Mahindra Bank plans to be aggressive in pushing its RuPay credit cards business and will launch more RuPay unified payments interface (UPI) credit cards, said Frederick D’Souza, the bank’s Business Head for Credit Cards.

Currently, the bank has seven RuPay credit cards, which have been showing good results. More will be added soon, said D’Souza.

Also read: I haven't carried a wallet anywhere in India this month, says Jay Kotak

“We have been at the forefront of launching RuPay credit cards. We have seen a lot of opportunities and adoption of UPI on credit and we see it as a gamechanger. Hence, we plan to launch more cards and go aggressive with existing credit cards,” D’Souza told Moneycontrol in an exclusive interaction.

In the April-June FY24 quarter, the lender’s credit card business jumped 67 percent on a year-on-year (YoY) basis to Rs 11,360 crore from Rs 6,820 crore.

Other than the RuPay UPI credit cards, D’Souza said that cards such as the Indian oil credit card, co-branded cards with Myntra, PVR, etc. are also doing well.

On RuPay UPI credit cards, D’Souza said that the segment comprises a decent stake of the total credit card business, which is continuously growing. “We are also looking at partnerships with fintech players and digital partners to boost our cards,” D’Souza added.

UPI on credit

In June 2022, the Reserve Bank of India (RBI) allowed individuals to link their credit cards to the United Payments Interface (UPI). However, this is possible only through select banks that have enabled the linking of their RuPay credit cards to UPI.

On May 31, BOB Financial Solutions, a wholly owned subsidiary of Bank of Baroda, announced that Bank of Baroda credit card customers can now use RuPay Credit Cards on UPI-enabled apps such as BHIM, PhonePe, Paytm, Google Pay, Slice, MobiKwik and PayZapp.

Also read: Uday Kotak’s successor at KMB unlikely to face major challenges, say experts

Similarly, in June 2023, Canara Bank and Kotak Mahindra Bank introduced the facility of UPI payments to merchants through RuPay credit cards issued by them.

Some of the other banks that have enabled the linking of RuPay credit cards to UPI are Axis Bank, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank, Union Bank of India and YES Bank.

“The demand for Rupay UPI credit cards is doubling in weeks,” D’Souza said. He added that the bank plans to run campaigns to bring more customers into the UPI credit card segment.

CC business

Credit card spending hit a record high of Rs 1.4 lakh crore in May 2023, the latest data from the Reserve Bank of India (RBI) showed. The total spending or outstanding dues on credit cards, which remained range-bound throughout the year in the previous fiscal year, has been rising by 5 percent, month on month this year.

Similarly, the number of cards in use has jumped by more than 5 million since January and crossed 87.4 million in the reporting month, making this an all-time high for May, according to the RBI data.

With the growth, the non-performing asset (NPA) level in the credit card segment for public sector banks stood at 18 percent as of March 2023 against 9 percent a year ago, whereas private sector banks reported a GNPA of 1.9 percent, according to data from the RBI’s Financial Stability Report.

“While there has been an overall improvement in asset quality in respect of personal loans, impairments in the credit card receivables segment have risen marginally,” the FSR report said.