Whalesbook
SBI Card Sells Bad Loans Amid Pressure
SBI Cards and Payment Services has sold approximately ₹1,800 crore of bad credit card loans to Integro Finserv. This sale is a key move for SBI Card to manage rising defaults and improve its loan book quality. Despite the transaction, the company noted its gross non-performing asset (NPA) ratio improved to 2.41% as of March 31, 2026, down from 3.08% a year earlier. Net NPAs also decreased to 1.04% from 1.46%. These figures reflect some internal improvement, but broader credit card sector challenges persist.
Buyer: Integro Finserv's Role
Integro Finserv, a Mumbai-based non-banking financial company founded in 2019, acquired the portfolio. The firm specializes in buying, resolving legally, and relending distressed retail loans, managing a large number of accounts nationwide. This acquisition fits Integro Finserv's strategy to maximize recoveries in the difficult distressed asset market.
Low Recovery Rates Persist for Bad Loans
Efforts by lenders to clean up balance sheets are ongoing, but recovery rates on stressed retail credit card loans remain low, estimated around 15%. This is significantly less than the overall banking sector's NPA recovery rates, which improved to about 18% in the fiscal year 2025, with specific channels like the Insolvency and Bankruptcy Code (IBC) achieving rates as high as 36.6%. This difference suggests that credit card defaults are harder to resolve. India's credit card market, with over 113 million active cards by the end of 2025, is seeing rising delinquency rates nationally, averaging 1.8% in 2025. Total outstanding credit card dues have more than doubled in four years, reaching ₹2.91 lakh crore by July 2025.
Market Share and Analyst Views
SBI Card holds a market share of about 19-20% in India's credit card market, making it the second-largest issuer behind HDFC Bank, which holds roughly 22-23%. ICICI Bank and Axis Bank are also significant players with shares of 16% and 14% respectively. SBI Card trades at a Price-to-Earnings (P/E) ratio of around 30.51, a premium compared to peers like HDFC Bank (19.4x) and ICICI Bank (19.0x). Analysts are cautious on SBI Card, with a common consensus rating of 'Sell'. While price targets suggest potential upside, recommendations point to concerns about credit risk and competition. Some analysts see potential positives from a focus on asset quality and digital integration.
Why Credit Risk Remains a Challenge
The core issue for SBI Cards is the inherent credit risk in the fast-growing credit card segment. Low recovery rates on bad retail loans, around 15%, highlight the difficulty in resolving these assets. Combined with rising national delinquency rates and intense competition, this puts pressure on profitability. While SBI Card's recent NPA figures show improvement, the large ₹1,800 crore sale indicates that deteriorating asset quality might be a long-term challenge, not just a short-term dip. Its P/E ratio of over 30 suggests its current stock price may not fully reflect the persistent credit strain and the costs involved in managing it. Even with overall banking recovery rates improving, concerns specific to the high-risk credit card portfolio remain.