There’s a land grab happening in India’s premium credit card space.
And the company behind it is India’s largest public sector bank, the State Bank of India (SBI)—a bank better known for catering to the masses.
Premium credit cards are characterised by a higher level of spending per card—an average of Rs 60,000-80,000 ($797-$1,063) in monthly spends. Mass offerings don’t exceed Rs 15,000 ($199) in monthly spend per card, according to industry executives The Ken spoke with. With India’s foremost premium credit card issuers—American Express (Amex) and Citibank—caught in the doldrums, there’s a vacuum in the market.
Amex is in trouble with the Reserve Bank of India (RBI). In April 2021, India’s central bank and regulator announced that it would restrict restrict Bloomberg RBI bars Amex, Diners Club from adding new clients Read more Amex and fellow premium card issuer Diners Club from issuing new cards. The decision stemmed from the companies’ failure to comply with data storage requirements—the RBI requires all payments companies to store data about Indian users in India. While the restrictions on Diners were lifted last month, Amex still remains under embargo.
Citibank, meanwhile, is plotting an exit plotting an exit The Ken Citi says bye Read more from the Indian market. “Citibank had a very good large base and some of the best [High Net Worth Individuals (HNIs)] were with Citibank. But then, their criteria of acquiring the customers was probably too harsh,” a former executive at SBI Cards & Payment Services Ltd told The Ken. SBI Card SBI Card The Ken Post IPO, SBI Cards learns what the RBI giveth, it taketh away Read more , SBI’s credit cards division, did not respond to a set of emailed questions from The Ken.
They added that while the stringent requirements around factors such as customer income and net worth helped Citi build a good base, its refusal to be more flexible with its requirements also made it harder for them to scale up. “That was the only reason they have failed in India,” they added. The former executive and others quoted in the story requested anonymity as they were not authorised to speak to the media.
While regulatory troubles are one part of Amex’s stumble, its core business in India—offering commercial cards issued by employers to employees for company expenses—has also declined. A former Amex executive told The Ken that large IT services companies have been moving their commercial card business towards the likes of HDFC, ICICI, and HSBC.