SBI Cards Facing Rising Delinquencies
SBI Cards and Payment Services has reported an increase in delinquencies for Q1, highlighting potential challenges in the credit card industry. Unlike banks, standalone card issuers can’t easily mask these issues.
High-Risk, High-Yield Business
Credit cards are lucrative but risky. SBI Cards has 60% of its receivables in EMIs and revolving credit. While revolvers generate significant interest income, they also carry higher risk.
Reflection of Broader Issues?
The stress seen in SBI Cards might indicate similar issues within banks that issue credit cards. As a result, many banks are now adopting a more cautious approach in the credit card market.
Banks Playing It Safe
In response to these challenges, banks are reducing their aggressive stance in the credit card market and focusing on safer strategies to mitigate risks.