Demonetisation gain for SBI as market share rises on debit card spends

State Bank of India (SBI) has grown its market share in debit card spends over the last six months even as its nearest rivals have lost ground. The country’s biggest lender reported debit card transactions worth Rs 11,720.73 crore in April, notching up a share of over 31%, data from the Reserve Bank of India shows. In October, the share was a shade under 30%.

In contrast, large private sector lenders, HDFC Bank and ICICI Bank, saw their shares drop over the six-month period following the note ban in October. ICICI Bank’s market share at the end of April was 12.5% ,when it reported `4,671.62 crore in debit card spends, down from nearly 15% in October. For HDFC Bank, the fall was sharper — to 12.8% in April from over 16% in October. The largest private bank by assets saw debit card transactions worth `4,818.66 crore in April.

Some of the gain in share for SBI can be attributed to a push for digital transactions post-demonetisation. In October, before high-value currency notes were withdrawn by the government, SBI and its associates had together reported `6,572.96 crore worth of transactions and commanded a share of just under 30%.

On its own, SBI accounted for a little over 26% of the market. Effective April 1, SBI’s associates stand merged with the parent.

One way by which SBI gained share was by reversing a rule that curbed online debit card usage for customers who it believed may not use the channel securely. The lender also worked to improve success rates of transactions by optimising page sizes and other similar technical initiatives.

While SBI had a smaller base of active debit card users to begin with, many were forced to switch to digital modes of payment amid a cash crunch after the note ban. Private banks had a relatively higher share of their user base already using debit cards for payments and as such, demonetisation helped them to a lesser extent.

At the end of April, SBI had nearly 35 crore debit cards outstanding, as compared to 2.39 crore for HDFC Bank and 3.7 crore for ICICI Bank. The total value of debit card transactions for the entire system in April stood at Rs 37,481.88 crore, up more than 70% from Rs 21,941.28 crore in October.

State Bank of India