scorecardresearchJump in credit cards sets a new record in May

Jump in credit cards sets a new record in May

Updated: 28 Jun 2022, 09:19 AM IST

In May, banks added 1.7 million cards, which was highest in 27 months

Outstanding loans on cards touch  <span class='webrupee'>₹</span>1.54-lakh crore

Outstanding loans on cards touch 1.54-lakh crore

Credit card additions and expenditures jumped at the fastest pace in May in recent quarters, underscoring the fading impact of Covid-induced disruptions on consumption habits, reported Economic Times. 

This happened as an increasing number of urban Indians took lengthy vacations and bought high-ticket discretionary items after being virtually padlocked for two consecutive summers.

The banking industry added 1. 7 million cards in May, the highest in 27 months. Outstanding loans on credit cards were the highest ever, breaching the 1. 54-lakh-crore mark.

To be sure, a reversal in the rate trends could impact spending on borrowed funds. India’s central bank has raised rates twice in the space of a month beginning early May to restrain inflation.

“However, with interest rates expected to rise rapidly in the next few quarters we need to see whether current trends are sustainable,” Ganapathy said.

The latest trend in credit card expenditure patterns indicates rising consumer confidence.

Spends through credit cards soared, both in terms of volume and value, among popular retail payment channels in April. Value rose nearly fourfifths in April to 1. 05 lakh crore, compared with a 22% growth in NEFT transactions and 16% growth in debit card spends.

Even in volume terms, credit card spends rose 42%, compared with 30% growth in NEFT transactions and 16% growth in debit card spends. The only exception was UPI transactions, which more than doubled during the period.

Credit card outstandings, or amount due to banks after the credit period is over, jumped about a fifth to 1. 54 lakh crore, compared with 1. 28 lakh crore in the same period a year ago. Credit card spends grew a strong 8% on a sequential basis and 118% year-on-year to 1. 14 lakh crore in May 2022.

HDFC Bank emerged as the largest acquirer with 385,000 new cards, followed by Axis Bank, ICICI Bank and SBI Cards that sold more than 200,000 cards each. Kotak Mahindra Bank, too, sold 181,000 new cards.c

First Published: 28 Jun 2022, 09:19 AM IST