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SBI Cards IPO: 10 vital facts about India’s credit card market that the draft prospectus reveals

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SBI Cards IPO: 10 vital facts about India’s credit card market that the draft prospectus reveals

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India’s credit card markets still remains largely under penetrated with the average number of credit cards outstanding per 100 persons in India at 2.2 as compared to 320.0 in the United States in 2017.

SBI Cards IPO: 10 vital facts about India’s credit card market that the draft prospectus reveals
State Bank of India (SBI), the country's largest public sector lender, has filed a draft prospectus with market regulator Security and Exchange Board of India (Sebi) to sell up to 4 percent stake in its credit card offshoot, SBI Cards and Payments Services (SBI Cards), to raise around Rs 9,600 crore through an initial public offering (IPO).  The IPO, which is awaiting regulatory approval, is set to be India's biggest this financial year.
SBI Cards is the second-largest credit card issuer in the country, with 9.4 million outstanding cards as of the end of September. The 485-page draft prospectus is a barometer of the financial sector in India and sheds light on a raft of topics, including the evolution and salient features of the payments scene in India.
Here are 10 interesting data points:
  1. There are 74 credit card issuers in India, including the top-three Indian private banks (HDFC Bank, Axis Bank and ICICI Bank). However, India’s credit card markets still remains largely under penetrated. In 2017, the average number of credit cards outstanding per 100 persons in India was 2.2 as compared to 320.0 in the United States, 42.0 in China and 73.0X in Brazil, and credit cards spends as a percentage of GDP stood at 3.0 percent as compared to 17.0 percent in the United States, 25.0 percent in Hong Kong and 12.0 percent in Brazil.
  2. HDFC Bank is the market leader and has maintained its market share in the number of outstanding credit cards at approximately 27 percent over the years, followed by SBI Card at 18.0 percent, ICICI Bank at 14.0 percent and Axis Bank at 13.0 percent.
  3. SBI cards is the second-largest credit card issuer in India, with 17.6 percent and 18 percent market share of the Indian credit card market in terms of the number of credit cards outstanding  as of March 31, 2019 and September 30, 2019, respectively.
  4. The market share of SBI Card in terms of total outstanding cards has continuously increased over the years from 15 percent in fiscal 2014 to 18 percent in fiscal 2019.
  5. The next six players, after the top four, together accounted for 22 percent of outstanding credit card in fiscal 2019.
  6. New players such as RBL Bank have been emerging strongly mainly on the back of co-branded cards. RBL Bank now accounts for approximately 4 percent of the credit card market.
  7. Foreign players such as Citi Bank have been losing market share over the years from 13 percent in fiscal 2014 to 5 percent in fiscal 2019 owing to aggressive growth from private banks and new players in the  market.
  8. The government’s vision of a cash-less society, digitalization, developments in e-commerce, and growth in POS infrastructure have encouraged the use of credit cards.
  9. Credit card spends have expanded robustly, growing at  a  CAGR of 32 percent from fiscal 2015 to fiscal 2019, and growth is expected to continue to reach Rs. 15  trillion in total credit card spends for fiscal 2024.
  10. India’s median population age is estimated at 28.4 years in calendar year 2020. Indonesia and South Africa are the only countries which has median population age closer to India at 29.5 years and 27.6 years, respectively. Japan had the highest median population age of 48.4 years.
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