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SBI Cards IPO: Expect credit card growth story to continue, says CEO Hardayal Prasad

Updated : February 26, 2020 11:54 AM IST

SBI Card IPO price band range has been fixed at Rs 750-755 per share. It opens for a subscription next week. CNBC-TV18 caught up with Hardayal Prasad, MD, and CEO of SBI Card to gauge the management's reading of the industry and his expectations from the well-anticipated IPO.  

Speaking about the Merchant Discount Rates (MDR), Hardayal Prasad, MD, and CEO of SBI Card said, “On the MDR rates, the discussion has been going on since demonetisation. The first time if you recall, the government of India went ahead and started looking at the MDR and at that stage, the debit card and MDR on debit were taken into account and there were some changes that were made. Subsequently, if we go back in the finance bill, the finance minister announced that there is going to be a relook at the MDR and there may be zero MDR on a select debit card.”

Speaking about the growth projections, he said that the credit card penetration is quite low in India. “If you compare with any other developed country or developing country, the penetration continues to be only at 3 for a population of 100. The same thing also reflects on the GDP. Overall, spends is also 3 percent of the GDP and that is where we feel that there is enormous potential for growth in credit card,” he added.

Prasad also expects growth to continue going ahead given tier-II and tier III cities' potential. “What we have seen is, if one looks at the BIS report of 2017 and 2018, there was a 50 percent increase in the credit card penetration. I think going forward, we feel very optimistic that the growth will continue and if you juxtapose it with the potential that exists in tier II and tier III cities, I personally feel that the growth story will continue for some time,” he said.

On whether they can maintain the pace of growth, he said, “I think the growth will continue. We have been growing faster than the industry, both in terms of card inflows as well as in terms of spends. I think the kind of strategy that we have built around, the distribution network that we have, the model that we have which is very different from any other card issuer, I think we will continue to exhibit quite strong growth and significant potential also exists.”
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