RBL Bank is expecting a dip in credit cards due to the new plastic issuances. Though RBL is confident of the overall revenues from the segment remaining intact, it is expecting the new plastic issuances to halve and a fall in spends as well in FY21.
The official of RBL said that the current economic climate will cause an increase in credit costs and money being set aside for possible loan losses, by over 30 percent in the cards segment. Credit card costs are likely to increase by 30-60%.
Though banks have a low reliance on credit cards for their advances, RBL has been using a slew of analytics to help grow the segment without fiddling with its delinquencies.
Mr. Harjeet Toor, the segmental head said that the announcement on a moratorium of 3 months announced by the RBI would help RBL keep stable in terms of revenue. He also expects only a 5 lakh sale of credit cards in FY21 as compared to the earlier 13 lakh due to the ongoing pandemic.
RBL has around 60% of customers from red zone areas that have already affected the use of credit cards. As a result the bank is expecting a 12 percent dip in the spends from which it majorly derives its interchange fee.