Private sector lender RBL Bank has launched a new credit card in collaboration with Indian Oil Corporation, named ‘Xtra Credit Card,‘ as part of its strategy to moderately grow its credit card portfolio and enhance customer engagement. The move comes amid scrutiny from the RBI over the rapid growth of the riskier unsecured credit segment.
Strategic Focus
RBL Bank aims for a moderate increase in its credit card portfolio, targeting a 15% growth if the industry expands by 20-25%. The focus is on achieving reasonable returns on capital, improving internal unit economics, and deepening cross-sell opportunities rather than aggressively increasing market share.
Regulatory Concerns
The RBI has expressed concerns over the fast growth of the unsecured credit segment, leading to increased risk weights on such assets. Despite these challenges, RBL Bank is committed to maintaining its presence in the credit card market without aiming for a larger market share.
Personal Loans Approach
For personal loans, another unsecured lending segment, RBL Bank prefers to offer loans to existing customers or those who approach the bank, rather than actively soliciting new clients.
Multi-Pronged Strategy
The bank’s strategy includes developing a field team for card promotion, exploring co-branded partnerships with state-owned entities like IRCTC and IOCL, collaborating with consumer brands such as Patanjali, and forming alliances with fintechs and non-bank lenders.
Card Features
The ‘Xtra Credit Card’ offers a 8.5% value back on spends at Indian Oil Corporation stations and 1% on other purchases. It is available in five variants, priced at Rs 1,500 each.
Market Dynamics
Fuel-related spending now constitutes over 10% of RBL Bank’s overall credit card transactions, up from 7-8% previously. This increase reflects broader industry trends, including higher fuel prices and a shift from two-wheelers to four-wheelers.