SBI cards NPAs are on the riseSBI faces huge losses
Apnaloan.com Research Bureau
11 Apr 2008
SBI Cards and Payment Services (SBI cards) is the second largest issuer of credit cards in India. So far it has issued 3.5 million credit cards and has registered a net loss of Rs. 186.61 core. The default is on the rise. GE Money and SBI had pumped in Rs. 200 core in the credit card business. This is a matter of great concern for the firm.
As on 31st December 2007, the Non Performing Assets (NPAs) of SBI cards stood at 16.28% which is possibly highest among the credit card issuers in India.
Though banks do not reveal their NPAs but analyst estimate that their NPAs would be somewhere in the range of 5% to 7%.
In an email response to Mint, Archana Handa, Vice-president, Corporate communications, GE Money, said: "SBI Cards continue to be the No. 2 credit card player in India, despite the tough market environment for consumer finance. In our effort to continue being a leading player and face the industry challenges in the coming year, some of our strategic initiatives include launching innovative new products to meet the needs of different customer segments, increasing penetration in the SBI customer base, and further enhancing the customer experience of every SBI credit card holder." (Para has missed out on something not making sense, pl chk)
An executive who does not want to be identified said, "Till recently, SBI Card was adding around 25,000-30,000 new cards a month, but a mandate was given to the top management to raise this level to 100,000. As a result of which,, the company compromised on the quality. But the loans that have turned sticky are so small that it's not worth filing legal cases against the borrowers, as the cost of fighting such cases will be more than the money involved,"
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