Federal Bank to enter credit card segment in a year, says official

Federal Bank is looking to enter the credit card segment in the next one year to complete its suite of lending products, a senior official said on Thursday.

The bank, which already has a co-branded card offering with SBI Cards, will focus on its existing customer base of over 1 crore to sell cards, its country head for deposit, cards and personal loans Nilufer Mullanfiroze told PTI.

All major banks have a credit card offering of their own for the customers, but the ongoing pandemic, which has resulted in job losses and salary cuts, has led to concerns over asset quality for unsecured products like credit cards and personal loans.

"In next 9-12 months we are looking at a launch of an independent credit card. There is an expectation that the new normal should settle down in India by then," Mullanfiroze said.

The bank will rely only on in-house customers and also deploy its analytics engine to choose customers in a bid to take care of concerns on book quality, she said, stressing that things will be better than what they are right now by then.

Already, there seems to be a pick-up in activity, with credit bureaus reporting enquiries to have touched two-third of pre-Covid levels, Mullanfiroze said, adding that the Chinese experience also points to an uptick in activity once Covid-19 infections wane.

Over two-third of cards will be sold to the under 35 segment, she said, adding that as cards are to be sold to existing customers, much of the sales will be in places where it has branches.

It will also have dedicated offerings for the diaspora.

The bank will announce the name of the network -- Visa, Mastercard or the home-grown Rupay -- on which the card will operate in a month, and will also complete the back-end work on technology and other aspects before the launch, she said.

The bank announced a tie-up with Fiserv on Thursday to support the launch of the card, and will start a digital and social media focused marketing campaign a month ahead of the launch.

She said one of the reasons for launching the independent offering is the bank's inability to achieve desired scale for the joint product with SBI Cards, and added that the bank can end the partnership with three-months' notice.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel