The reason could be they want the middle pie. The credit card consumers who are prompt repayers but revolve their card balance due to not sufficient funds their credit score is not above 750 but above 600.They get to revolve their balance at lower interest rate say 20 to 36 percent as compared to 48 percent charged by other banks. When Mr vaidyanathan said they are expecting 500 crore profit from credit card business i can’t see any way other than this to do it.
It’s only my guessing i don’t know how they are going to do it. Some times i feel I’m too optimistic about the business and finding excuses to believe management talk. That’s a red flag i find in myself so take my view with caution.
Disclosure: allocated 15% of portfolio. The largest bet
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