Credit card outstandings jumped 22% in FY15, after slumping in the previous fiscal, as a growing e-commerce industry propelled the growth in credit card spendings.
RBI data showed that credit card outstandings rose to R30,471 crore as of March end, from R24,856 crore a year ago, a rise of 22.59%. In 2013-14, credit card outstandings had shrunk by 0.22%.
“The growth in spending through credit card has increased phenomenally. The spending growth is driving the outstanding growth. Spendings have been growing 25-30% for almost two years,” said Jairam Sridhar, president of consumer lending at Axis Bank.
E-commerce firms, such as Flipkart, Amazon, Snapdeal and Jabong, have the option of paying with a credit card and all online portals have tie-ups with almost every bank. Promotional offers these websites provide in collaboration with specific banks through credit card payments also help boost spending through cards, Sridhar said.
Further, credit card issuances have also increased, bringing in more individuals under the spending circle.
“Issuances have risen, which means more customers are getting added and banks are more relaxed on unsecured lending,” said an executive at a public sector bank.
Private lenders, such as HDFC Bank and ICICI Bank, were the leading issuers of credit cards in FY15.
State Bank of India had a market share of 15% as of March. Total credit cards in circulation stood at 208.6 crore as of March end, data from the RBI showed.
ICICI Bank, which had gone slow in unsecured lending during 2008-2010, had started giving unsecured loans more aggressively.
“The unsecured credit card and personal loan portfolio were at about Rs 10,900 crore as of March 31 and continued to remain a small portion of about 2.8% of the overall loan book. The growth rate is high due to the lower base,” said Chanda Kochhar, ICICI Bank MD& CEO, at a conference call after the bank’s results.
HDFC Bank, too, has been growing unsecured loan portfolio faster. The bank is targeting 12-15% growth in unsecured loans. “Bank’s appetite for unsecured lending has increased and new card issuances have increased,” said Sridhar. With banks’ appetite for unsecured business back, credit card spends are likely to rise further.
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