Ravindra Rai is managing director and chief executive officer at BOBCARD LIMITED (a credit card subsidiary of Bank of Baroda). In an interview, Rai speaks to Falaknaaz Syed about emerging trends in cards space, the impact of the recent Supreme Court ruling that set aside a National Consumer Disputes Redressal Commission order that barred lenders from charging more than 30 per cent interest rate on credit card dues and listing plans.Q1.Will credit on UPI be counter-productive for credit cards?Ans—Credit on UPI will have very limited cannibalizing effects on credit cards since essentially both products are positioned for different segments and customer personas. Cards have been a historically KYC-efficient and worldwide recognized system of payments through credit. Credit on UPI could be essentially looked as a back-door entry for entities who do not hold regulatory license to issue credit cards. These products infact help card issuers by enhancing the card market by expanding the pool of credit tested customers for better limits and features. Credit Cards with their reward programs, cashback, international acceptability and enhanced security features do not see a diminishing market share.Q2. Any new trends that are emerging in the credit cards and payments space?Ans—There are a lot of insights which keep coming in cards, and take us by positive surprise. One revelation in the past few months is that the spends per card from women cardholders is as high as men cardholders. This was never the case with any card issuer in the past and clearly suggests a shifting household economics, where women empowerment is leading to them taking more ownership of household purchases. This was also the seed behind us launching our powerful women-centric card proposition Tiara. Other interesting trends are that the spends coming from Tier 3 and 4 towns of the country are far outshining the spends from the metro cities. Earlier issuers were content in just being present in top 20-25 geographies by population and try to capture 80-90 per cent of the market. The aspirations of the youth in Indian towns have been fuelled by e-com and cards enabling those purchases. Just sharing one data point, more iPhones were purchased on our card in Jaipur, Lucknow and Baroda than in Mumbai and Delhi. More than one third of electronics and white goods are now purchased on purchase EMIs on credit cards, which indicate how cards have single handedly eliminated the Buy Now Pay Later (BNPL) category by replacing this product forever.Q3. What is your customer acquisition strategy?Ans–Our customer acquisition strategy is essentially three pronged – we have sufficient headroom to cater card needs to a large segment of our Banca customers across Tiers – right from the metro cities of India to the rural Bharat, both of whose aspirations are met by our varied product spectrum. We also have a fully functional and kicking digital acquisition channel. Apart from this, we do aggressively scout the cobrand partnership route, where there is meeting of minds with category leaders in various B2C spaces, be it e-com, fuel or other large scale consumer use cases. These three strategies are hedged against one another, and bring us an optimal sourcing mix. Q4. Recently, the Supreme Court set aside an NCDRC order that barred lenders from charging more than 30 per cent interest rate on credit card dues. Will this pave way for a steep rise in interest rate penalties?Ans—Well, the Honorable Supreme Court has set aside this order highlighting interest rates to be a commercial prerogative of the card issuers. So, while deregulating would mean that issuers can increase these rates, I personally believe that this is mostly done to create deterrence from defaults rather than make it a revenue streamline. So, I don’t perceive this to help so much in the profit and loss per se, but it will create a very, very strong deterrent for delayed payments. Q5. How are the new card issuances and spends panning out?Ans–I can say at this juncture, we are around a stone’s throw away from 3 million card issuance and are on course to clock another 2 million cards by this financial year. Our spends are also pretty healthy at around nearly 3,200 crore a month, expecting to grow at around 1.8 to 2 times of the industry growth rate. Q6. What are your delinquency levels?Ans–We are into the philosophy of cautious aggression. So, in this receiving market where a lot of issuers are struggling to maintain asset quality, we find a good business source because we source customers from the Bank channel. Our Gross NPA levels are under control, much better than the industry at 3.19 per cent and we probably will close FY 25 with sub-3 per cent.Q7. When do you plan to list?We plan to list next financial year and are working on the plan internally. However, externally we still haven’t started anything.
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