Opportunities aplenty in NE:
Sharp increase in Credit Card usage anticipated
The credit card industry anticipates significant growth in credit
card usage in the country following the reduction in credit card
“Some banking institutes have already taken the lead of reducing the
interest rates of credit cards and hence there would be competitive
industrial pressure for other banks as well. Therefore, we can expect an
overall reduction in credit card interest rates in the next two to three
months in the market,” said Chairman, Payment Card Industry Association
of Sri Lanka (PCIASL) Gihan Dias.
Some of the Credit Cards in use
“At present the average credit card interest rate in the country is
around 36 to 40 percent which is very high and there is enough room for
industry players to reduce the interest rates to compete with other
similar products in the market.
However, it depends on a few important factors such as the high
increase on Non Performing Loans (NPLs) in the credit card industry for
the past six to eight months. Therefore, it is a balancing act between
the loss and income ratios of the bank,”
“There are better managed card centres which are performing really
well despite the reduction in interest rates of 10 to 15 percent.
Therefore, if this trend could be maintained within other banks too we
can predict a 10 to 15 percent reduction on interest rates,” he added.
“As at today, the usage has increased up to one million credit cards
in the country whose active usage is 80 to 85 percent. There are two
segments of credit card usages - those who use the credit card and
settle the total amount and those who settle only the minimum amount or
the small component of the balance,”
“There can be a growth in credit card usage this year too when
considering the outstanding amounts of the non performing loans of
credit cards. According to Central Bank statistics over the last few
months, we actually saw a reduction on the issue of credit cards
compared to the past five years.
Even though there was a 20 to 25 percent growth rate on issue of
cards for the past five years continuously, due to the current economic
downturn we hardly see a growth rate on the issue of credit cards ,” he
“There is a consolidated deck on multiple card users since they also
moving in to use only one card to reduce the expenditure levels to
overcome the current economic crisis.
There are very few market players who operate in the rural areas of
the country and therefore, the market penetration in rural areas is very
The main reason for that is the limited network facilities in banks
and the products have not been categorized or even developed according
to the requirements of selected market segments,”he said.
“There are plenty of opportunities in the Northern and Eastern
provinces for the credit card industry. In these areas credit cards can
be used for multiple purposes such as an identity card, as a food
collection card and as a payment option.
However, at present no one has looked at these opportunities which
are available in these areas and I believe it is essential to evaluate
and get the initiative to provide the tailor-made solutions for these
needs,” he said.
“The PCIASL’s main objectives are to educate the masses on the need
of credit cards, and to educate them on how to manage its risks and also
to work with the regulators to reduce credit card frauds and to improve
the credit card procedure.
We are not working on product developments and competitive elements
of the industry,” he said.