Plastic Money - The Indian Experience
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : ITSY011
Case Length : 10 Pages
Period : 1990-2001
Pub Date : 2002
Teaching Note : Available
Organization : HDFC, Citibank, ICICI Industry : Banking and Finance
Countries : India
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"Why has India been slow to adopt cards? Mostly
because there were no guidelines and no standards, so it was natural for the
banks and other people to wait and watch."
- M.N. Gopinath, Executive Vice-President, ICICI Bank, in
May 2000.
The Plastic Card Boom
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In the late 1990s, the plastic cards market in India,
comprising credit cards, smart cards, debit cards, charge cards, stored value
cards and others, picked up momentum like never before, growing at an annual
rate of 25%. Analysts attributed this growth largely to the rapidly increasing
user base of debit cards.
Though initially, there were only two players, (HDFC and Citibank), the debit
card market base grew considerably through 1999 and reached the 3 million mark
in March 2000. The usage figures indicated a very healthy growth of the market
in future, as seven out of 10 cardholders were reportedly using their card
regularly. |
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The annual spending through debit cards in India reached over Rs 5 billion.
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The growth of debit cards was all the more impressive
considering the fact that credit cards, introduced in the country in the
early 1980s, had managed to reach the 10 million-user base level only in
2000.
Thus, the debit card user base had reached one-third of the credit card
user base in just around one-tenth of the time.
Also, smart cards introduced in the late 1990s, had become very popular,
especially in the financial services, banking, healthcare, transport and
telecommunication businesses. |
The demand for co-branded cards during 2001 was a further
indication of the fact that the Indian market had finally realized the potential
of plastic money.
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