We are the second-largest credit card issuer in India, with 17.6% and 18.0% market share of the Indian credit card market in terms of the number of credit cards outstanding as of March 31, 2019 and September 30, 2019, respectively, and 17.1% and 17.9% market share of the Indian credit card market in terms of total credit card spends in fiscal 2019 and in the six months ended September 30, 2019, respectively, according to the RBI.
Credit card spends have registered robust growth, growing at a CAGR of 32.0% from fiscal 2015 to fiscal 2019, and growth is expected to continue to reach Rs. 15.0 trillion in total credit card spends for fiscal 2024, according to CRISIL Report. The Government’s vision of a cash-less society, digitalization, developments in e-commerce, and growth in POS infrastructure have encouraged the use of credit cards.

We compete with other credit card issuers and payment solutions providers such as banks, payment banks, NBFCs and financial technology enterprises on the basis of a number of factors, including brand, reputation, customer service, product offerings, incentives, pricing, technology and other terms. In particular, mobile, e-wallet and tokenization platforms, including the increasingly prevalent unified payments interface platform, present formidable competition as they are able to attract large payment volumes at low or no payment processing fees to merchants. Competition in credit cards is also based on merchant acceptance and the value provided to the customer by rewards programs. Many credit card issuers have instituted rewards programs that are similar to ours, and, in some cases, could be viewed by customers as more attractive than our programs, which could lead such cardholders to prefer spending using our competitors’ credit cards over our credit cards. As competitive pressures intensify, we may be required to expend additional resources to offer a more attractive value proposition to our cardholders, which could negatively impact our profit margins. These competitive factors may also affect our ability to attract and retain cardholders, slow down our credit card receivables growth and reduce revenue growth from our core business.
Many of our competitors are also focusing on cross-selling their products and developing new products or technologies, which could affect our ability to maintain or grow existing cardholder relationships. Some of our competitors have developed, or may develop, substantially greater financial and other resources than we have, may offer higher value propositions or a wider range of programs and services than we offer or may use more effective advertising, marketing or cross-selling strategies to acquire and retain more cardholders, capture a greater share of credit card transactions, attain and develop more attractive partnership programs than we have.
Our Promoter is our largest customer referral partner, and our referral arrangements with SBI allow us to market our products and services to SBI customers by utilizing our Promoter’s vast branch network. For example, our Promoter provides space for our outsourced sales workforce to be present at select SBI branches, and we also carry out joint marketing efforts with our Promoter.
Our arrangements with our Promoter are not exclusive. As a result, our Promoter could enter into similar or competing relationships with third parties, including our competitors.
Although our Promoter would require the RBI’s approval to relinquish control in us, we cannot assure you that our Promoter would not divest additional equity stakes in us in the future.
Unsecured credit card receivables present a greater credit risk for us than a portfolio of secured loans because they are not supported by realizable collateral that could help ensure an adequate source of repayment for the credit card receivables. Although we may obtain direct debit instructions from our cardholders for such unsecured credit card receivables, we may still be unable to collect in part or at all in the event of non-payment by a cardholder. Further, any expansion in our unsecured credit card receivables portfolio could require us to increase our provision for credit losses, which would decrease our profitability.
The co-branding arrangements entered into by us with our co-brand partners are for a fixed period of time, typically ranging from three to five years, and the agreements terminate upon the expiry of the term, unless extended or renewed by the parties. Further, while certain of our co-brand agreements provide for a lock-in period, the parties have the ability to terminate the arrangement upon the expiry of the lock-in period, after providing a prior written notice in accordance with the terms of the respective agreements.
We rely on third-party service providers, merchants, cardholder acquisition channels, processors, aggregators, payment networks and other third parties for services that are integral to our operations, such as call center services, fraud control, payment processing, collections, logistical services and certain other services that we provide to our cardholders. We also rely in part on third party co-brand partners for new cardholder acquisitions.
A higher interest rate environment could reduce demand for credit products generally and may also adversely impact our cardholders’ spending levels, as individuals are less likely or less able to take on credit and increase consumption when interest rates are high. This could reduce the volume of new business for our credit card products and the amounts of our cardholders’ credit card transactions, thus resulting in a material adverse impact on our revenue and profits. Higher interest rates could also adversely affect our ability to obtain new funding at a cost of funds that we deem reasonable or at all. These effects could be heightened if the share of our revenue from operations that we derive from interest income increases in the future, which could increase our exposure to interest rate volatility.