HDFC Bank Cleared To Issue New Credit Cards In India

India's largest private-sector lender HDFC Bank said on Wednesday that the central bank has relaxed restrictions placed on it last year on issuing new credit cards, following outages in the bank's digital payment services. However, restrictions on new launches related to the company's digital business will continue till further review by the Reserve Bank of India, HDFC Bank said in a regulatory filing.

HDFC Bank's shares rose as much as 3.4 per cent to a five-month high of Rs 1,565.35. The bank has sent a board-approved letter to the Reserve Bank of India saying it will comply with all the norms, according to a source. After instances of digital outages at the bank last year affected its online services the RBI barred the bank from issuing any new credit cards in December, till further notice. With nearly 15 million credit cards, HDFC Bank is the largest lender in the segment with nearly 24 per cent market share.

Over the last eight months, HDFC Bank's peers such as ICICI Bank and SBI Cards have gained ground. "Lifting of RBI restrictions before the festive season augurs well and we expect the bank to turn more aggressive on credit cards over the next few months," Macquarie said in a research note. In a media interaction earlier this year an HDFC Bank executive said the company had very aggressive plans for the credit card segment once the ban was lifted.

"The RBI move addresses the key overhang as HDFC Bank is the largest credit card issuer in the country and the credit card segment is the key to the bank's overall profitability," brokerage house Motilal Oswal said. The lender's fee income growth was impacted after the ban came into effect.