SBI Cards opted to enter the credit card field in 1998, when the Indian stock market and SBI were recovering from the Harshad Mehta scandal, recognizing the potential of the credit card business in the twenty-first century. SBI credit Card surpassed 1 lakh cardholders in a year and 1 million cardholders in 2002, and there is no turning back now that it has partnered with Indian railways. After HDFC Bank, the company is India’s second-largest card distributor and the first to list on the Indian stock exchanges. The company currently has over 10 million customers and holds 18 percent of the entire market share in India.
Benefits Of SBI Credit Card
Earn Rewards, Bonuses, and Vouchers
The card’s capacity to earn reward points against every transaction is one of the most attractive features. While some transactions can earn 1 reward point, others can earn over 13X reward points. Benefits of SBI card also includes attractive gift vouchers and exciting welcome bonuses. You can use the accumulated bonus and vouchers to enjoy amazing discounts and offers. You can also redeem the SBI credit card rewards to make down payments, purchase flight tickets, book hotel stays, enjoy fuel surcharge waiver, get discounted movie tickets, and more
Complimentary Lounge Access at Airports
SBI card benefits also include complimentary lounge access at airports. SBI lounge access credit card includes complimentary access to International Priority Lounges, outside India, as well as Domestic VISA/Mastercard Lounges, in India. Depending on the credit card scheme, these may vary.
SBI Cards’ Growth Drivers
Less penetration in the card sector: If you compare the overall number of cardholders in India to the total population, you’ll find that India only has three credit cards for every 100 people. In the United States, there are 320 credit cards for every 100 persons, indicating a vacuum that credit card firms have yet to address.
Spice Jet, Tata, Etihad, Apollo, IRCTC, and American Express have all joined with the company to expand their reach through corporate branding. This will continue to promote their interest income and commissions. Its recent co-branding with India’s leading merchant banking app Paytm as a Paytm SBI Card demonstrates how seriously the SBI Card is taking the task of catering to the economy’s untapped volumes.
Growing E-commerce Network Trends
The advent of e-commerce platforms in India has increased the desire for credit cards, which offer attractive discounts as well as short-term advances. Payment gateways, regardless of the type of e-commerce platform, will almost always have a credit card option.
Strong parental support
SBI, the parent business, is well-known in India’s banking industry. This may make it easier for SBI Cards to obtain low-cost credit for a longer period of time. Furthermore, SBI’s robust presence will continue to attract a healthy customer base.
Oligopoly structure in unlisted space
After the government promoted privatization and disinvestment to hang the prices of commodities on the demand-supply mechanism, there may be no monopoly structure in any industry. Due to high entry barriers, credit card distribution organizations have little control over the pricing of the service, putting them in the driver’s seat.
Monopoly structure in the listed space
Listed companies with no competitors command a high premium on Indian exchanges, as investors keep a close eye on these types of companies.
Cost to Income Ratio
This ratio has a distinct identity in the examination of the balance sheet, and it clearly demonstrates how well the company’s management has done their work in disbursing loans to borrowers while keeping the cost-cutting attribute in mind. The operating expense to operating income ratio is computed by dividing operating expenses by operating income (net interest income plus other income). According to SBI Cards’ consolidated financial accounts, the Cost to Income ratio is 56.6 percent. In comparison to other NBFCs, the ratio is larger, which raises some concerns.
Compounded Annual Growth Rate (CAGR)
The future stream of cash flows of any institution is based on their direct revenue stream. In the last five years, SBI Cards has grown its revenues by 36%, which comprises revenue from direct operations (loans and advances) and other income from commissions on credit card sales.