SBI Card, the payment solutions wing of India’s largest lender State Bank of India (SBI), has raised over Rs.700 crore from various financial institutions during the second half of the previous fiscal year. The company has noted that this fund will be used to improve its growth beyond the average growth witnessed in the credit card industry. The company has raised this amount from many top lenders in the country including its own parent organisation SBI.
This fundraising is a part of the company’s plan to raise Rs.1,500 crore to increase growth. So far, SBI Card has raised Rs.250 crore from its parent company SBI and Rs.100 crore from ICICI Securities. It has also raised Rs.50 crore each from Axis Bank and Canara Bank through the issue of non-convertible debentures (NCDs) at 9.15% coupon. The company has also raised Rs.250 crore from Axis Bank by issuing NCDs at 9.55% coupon.
The company noted that it will raise the remaining Rs.800 crore based on its requirements and market conditions. However, it hasn’t provided any specific plan for the upcoming fundraising. SBI is the lead banker for the consortium of lenders to SBI Card.
For the purpose of working capital, SBI has provided Rs.11,000 crore to SBI Card. The company has also availed Rs.1,500 crore each from Canara Bank and Central bank of India to comply with the Rs.14,000 crore working capital norms.
As per the data provided by the Reserve Bank, SBI has increased its outstanding cards by 31.38% during the one-year period between February 2018 and February 2019. In other words, SBI has added 1.93 million cards to the market during this one-year period. The data also revealed that credit card market leader HDFC Bank increased its outstanding cards by 18.41%.
Private lenders HDFC Bank has about 12.48 million outstanding credit cards in the Indian market as of February 2019. SBI, on the other hand, has a total number of outstanding credits over 7.9 million during this period. When it comes to credit cards, HDFC has a total market share of 27.1% followed by SBI with 17.3%.