Credit card spending scales record high at Rs 1.4 lakh cr in May; 87.4 million cards in use

saumyasingh July 16, 2023

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Credit card spending scales record high at Rs 1.4 lakh cr in May; 87.4 million cards in use

According to the latest data from the Reserve Bank of India (RBI), credit card spending in India reached a record high of Rs 1.4 lakh crore in May. Throughout the previous fiscal year, the total spending or outstanding dues on credit cards remained relatively stable. However, this year, there has been a consistent month-on-month increase of 5 percent in credit card spending.

In addition to the rise in credit card spending, there has been a notable increase in the number of credit cards in use. Since January, over 5 million new credit cards have been issued. Consequently, the total number of credit cards in circulation reached an all-time high of 87.4 million, according to data from the Reserve Bank of India (RBI). This indicates a growing adoption of credit cards and a rising trend in their usage among individuals.

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Out of the new additions, a significant number of cards, approximately 2 million, were issued in the first two months of the current fiscal year. In January 2023, the total number of active cards in the country stood at 82.4 million. Over the subsequent months, the number of credit cards has continued to grow steadily. It reached 83.3 million in February, 85.3 million in March, and 86.5 million in April, according to the data provided.

Throughout the financial year 2022-2023 (FY23), card spending in India remained within the range of Rs 1.1 to 1.2 lakh crore. However, in May of the current year, card spending surged to an unprecedented level, reaching Rs 1.4 lakh crore, according to data from the Reserve Bank of India (RBI). This indicates a significant increase in consumer spending using credit cards.

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The data further revealed that the average spend per card also reached a new peak, amounting to Rs 16,144. This indicates a higher average expenditure per card, reflecting increased consumer confidence and a shift towards digital payments.

The record-high credit card spending and the rise in average spend per card highlight the growing importance of credit cards as a preferred mode of payment and the increasing purchasing power of consumers in the Indian market.

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HDFC Bank, a leading player in the market, had the highest number of cards in circulation, with 18.12 million cards in May. The bank also holds the largest market share in terms of outstanding dues, accounting for 28.5 percent of the total industry-wide outstanding dues.

SBI Card holds the second position in terms of credit cards in circulation, with a total of 17.13 million cards. ICICI Bank follows closely behind with 14.67 million cards. Axis Bank ranks as the fourth largest credit card issuer, with a total of 12.46 million cards.

Axis Bank’s recent acquisition of the retail portfolio of Citibank has allowed it to narrow the gap with ICICI Bank. When Citibank sold its retail banking and card portfolio to Axis Bank in 2022, it had approximately 162,150 active card users. This acquisition has contributed to Axis Bank’s growth in terms of credit card market share.

According to a recent report by TransUnion Cibil, delinquencies in the card portfolios of banks have been increasing, signaling a rising stress level among individuals. In March 2023, delinquencies in the card portfolio rose by 66 basis points to reach 2.94 percent.

This report comes at a time of heightened concerns over riskier unsecured loan portfolios, as expressed by regulators. The report also highlighted that cards and personal loans were the fastest-growing products.

In terms of asset quality, the report by TransUnion Cibil indicated that card balances unpaid for over 90 days stood at 2.94 percent, reflecting a 0.66 percent increase compared to the same period in the previous year. However, the delinquency rate for personal loans improved slightly by 0.04 percent to reach 0.94 percent.

Regarding loan growth, outstanding balances on cards experienced a growth of 34 percent in the year leading up to March 2023. Similarly, personal loans witnessed a growth of 29 percent during the same period.