YES Bank in credit card segment

Private sector lender YES Bank became the latest entrant in the credit card space on Tuesday. Going ahead, the lender has planned an aggressive push as it aims to capture a market share of 17-18 per cent in the next five years.

“Several foreign banks have not been aggressive in the credit card space and that will also help us to increase our market share. In the next five years we plan to issue 4-5 million credit cards and capture a market share of 17-18 per cent. We want to be one of the top three players in the next five years,” said Pralay Mondal, senior group president, YES Bank.

As per the Reserve Bank of India data, at the end of March 2016, there were 24.5 million cards in the system.

In order to grow the market share, unlike the other lenders who have been mainly focusing on the existing customer base, YES Bank will also be actively looking at giving cards to the non-bank customers as well.

Mondal says that he plans to use credit cards also as an acquisition tool for its other loan products. Most banks have refrained from this aggressive open sourcing after the 2008-09 crisis as it had led to a surge in bad loans in this unsecured portfolio.

However, despite this YES Bank is confident of adopting open sourcing as they believe that with the help of credit bureaus the risk can be minimised.

The lender has launched seven variants of credit cards and the rate of interest will range between 1.2-2.4 per cent per month.

In order to expand its base, the bank will also look at targeting corporate clients.This is in line with the bank's overall strategy where they have been looking at growing retail book to about 20 per cent by 2020.

At the end of quarter ended June, the share if retail and business banking segment combines was 32.5 per cent.

Even at a time when credit growth for the overall system has been growing in single digits, lenders have been aggressively focusing on the retail segment, specifically unsecured lending-credit cards and personal loan.

Mondal also believes that the overall growth in the retail segment will also help in fuel the credit card growth.

Yes Bank