DCB Bank, a prominent financial institution, is gearing up to reintroduce its secured credit card by the end of December. This move comes as DCB Bank acknowledges the unique advantages and niche customer base for secured credit cards, offering an alternative to traditional credit cards. Secured credit cards are collateralized and are typically secured against a fixed deposit, making them a valuable option for individuals who may not meet the eligibility criteria for traditional credit cards.
Secured Credit Cards vs. Traditional Credit Cards:
Secured credit cards, like their traditional counterparts, provide customers with access to a line of credit to make purchases and payments. However, they require collateral in the form of a fixed deposit, which serves as security for the credit limit. This security mitigates the risk for the bank, allowing them to extend credit to individuals who may have limited credit histories or lower credit scores. This approach has proven to be especially popular among self-employed customers and those who seek to build or rebuild their credit.
Key Features of DCB Bank’s Secured Credit Card:
DCB Bank offers the DCB Payless credit card, a secured credit card tailored to customers who benefit from the collateralized credit structure. While the primary features of secured credit cards align with traditional ones, DCB Bank is working on technology upgrades to enhance the customer experience. The bank plans to market these secured credit cards through its branches rather than extensive “above the line” marketing.
Strategic Focus and Business Plans:
DCB Bank’s focus on secured credit cards aligns with its long-term business strategy. The bank aims to maximize the use of its resources by concentrating on areas where it can excel. Murali Natrajan, the Managing Director and Chief Executive Officer of DCB Bank, emphasizes the bank’s intention to shift its emphasis to business loans, aiming to achieve better margins within its overall portfolio. This strategic shift follows an improvement in the post-Covid business environment.
Additionally, the bank’s asset growth will be driven by a diverse portfolio, including mortgage loans, Kisan credit cards, tractor loans, micro-finance loans, and co-lending initiatives. While the bank is presently involved in the microfinance segment through business correspondents, it remains open to exploring strategic opportunities for further growth.
On the liability front, DCB Bank aims to strengthen its retail term deposits and low-cost current account savings account (CASA) deposits, promoting stable and sustainable growth. To enhance its CASA offerings, the bank is redirecting existing branches and introducing innovative products, such as cash-back and differentiated pricing on various CASA account tiers.
DCB Bank’s decision to reintroduce secured credit cards by the end of December underlines its commitment to providing financial solutions that cater to a diverse clientele. The unique appeal of secured credit cards and the bank’s strategic focus on various loan segments will likely contribute to its growth and success in the evolving banking landscape.
