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RBL Bank expects further defaults in its credit card business

RBL Bank expects to see further defaults in its credit card business in the months to come. At the end of September 2020, 9.4% of the banks’ credit card customers, in value terms, had not repaid their dues, a month after the Reserve Bank of India’s six-month loan moratorium policy ended, according to the banks’ investor presentation. Since then, some customers have repaid and the value of overdue credit card customers has reduced to 8.6% as of date, said Harjeet Toor, head of retail, inclusion and rural business, RBL Bank. “Around 54% of this pool of customers have not paid since April or May, this is roughly 5% of our portfolio, most of our credit losses will come from here. The size of this pool is within our expectations. In addition, only 0.4% of our the portfolio is overdue by 90 days,” he said during an earnings call. The RBI's policy, announced in the wake of Covid-19, allowed bank and non-bank borrowers, including credit card customers to defer their monthly loan repayments for six-months, till the end of August. In April, around 24% of the banks’ credit customers in value had availed the moratorium in April which reduced to 16% at then of August. The credit cards book grew by 41% YoY to ₹11,401 crore at the end of Q2FY21 and now makes up 46% of the banks’ total retail advances as of September 2020. The bank issued close to 100,000 cards in September and aim to return to its…

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