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    Earnings call Q4FY2023-24: Here’s what SBI cards had to say about delinquency trends in card payments

    “The industry has been witnessing stress in the overall card segment over the last few quarters, driven by macro factors like higher leverage and growth in advances”, said Abhijit Chakravorty, MD and CEO of SBI Cards, during Q4 FY 2023-24 earnings call for SBI Cards. SBI Cards had brought attention to these concerns in the previous quarter’s earnings call too. Chakravorty added, “We are now observing that in the overall  industry, delinquency trends of 30+ and 90+ have remained elevated in December ’23 at the same levels as of September ’23.”

    In its earnings call, SBI Cards highlighted the current issue of delinquency facing the card sector. “Some customers had obtained multiple trade lines from other lenders after taking a card from us, and this over-leverage has impacted the repayment capacity, which in turn had impacted our portfolio”, said Chakravorty. We can gather insight into consumer behavior from this. It indicates that customers have been accruing credit from multiple lenders increasing their likelihood of defaulting on their payments. SBI Cards also cited “worsening of write-offs”, when asked about the increase in credit costs by Mahrukh Adajania of Nuvama.

    Addressing the delinquency concerns

     SBI Cards noted that the RBI had taken regulatory action over this trend in delinquency. However, they too have implemented certain measures to combat this.

    Modifying the product lifecycle:

    SBI Cards highlighted that they had reformed the process of selling cards beginning from sourcing to underwriting, marketing and cross-sale campaigns. They had also reformed portfolio management actions like credit line decrease and blocking of cards. Additionally, they “intensified collection efforts”. Along with these actions, they mentioned that they offered flexible payment plans in a bid to increase payments and reduce overall credit cost.

    Reducing limits:

    In their presentation SBI cards revealed that they had reduced limits of more than 1.5 lakh accounts in the last quarter, taking the total limit reductions to over 5 lakh accounts over the last financial year. These limits, they explained were imposed based on “leverage of that customer” and observing “ any shift in the transaction pattern over a period of time, which may indicate that there are some signs of economic stress.”

    Leveraging data:

    Chakravorty said that the data from sources such Goods and Services Tax (GST), Employees’ Provident Fund Organisation (EPFO), etc to spot “warning triggers”. SBI cards also mentioned accessing the “bureau record” of a customer to learn of their behaviour before enforcing limits, when questioned on the process by Abhishek Murarka of HSBC. When further questioned on the process of leveraging this data on customers to enforce limits, SBI  cards said, “For all our customers, we get the bureau data at least once in a quarter” referring to a Credit Bureau such as Credit Information Bureau India Limited (CIBIL ). They added, “we have increased the frequency of bureau hits for certain set of customers, which as per our model becomes high risk.” Further, they mentioned that, “if the customer takes another trade line or takes suddenly three or four personal loans, all that information comes back to us as triggers”, thus indicting their risk level.

    Strategies for increasing market share

    SBI Cards was asked about the strategies they would be adopting to increase their market share in the upcoming quarter by Anuj from Bank of America. Chakravorty noted that SBI cards “had done some cleaning of our portfolio.” He said that two quarters back, they closed inactive accounts from customers who were unable to provide KYC.

    He also noted that when it came to increasing market share in ‘transactions’, “we are betting on our UPI”. He highlighted that SBI card’s financial results noted that Tier 2 towns had “a far better pickup of RuPay customers using it on the UPI terminals.” Indeed, the financial result noted that in Tier 2 cities, 71% customers used UPI  while only 29% of customers used UPI in Tier 1 cities.


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    The post Earnings call Q4FY2023-24: Here’s what SBI cards had to say about delinquency trends in card payments appeared first on MediaNama.

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