Number of credit card accounts grew 50% since demonetisation: CIBIL report

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Published: June 28, 2018 5:33:43 PM

A CIBIL study has found that the number of credit card accounts following demonetization in November 2016 has increased nearly 50%. The number of active consumer durable loans has seen a rapid rise of 83 per cent over the past year to reach 1.95 crore.

The number of active consumer durable loans has seen a rapid rise of 83 per cent over the past year to reach 1.95 crore.

While the real benefits of demonetisation accruing to the economy are often debatable, a CIBIL study has found that the number of credit card accounts following the note-ban reform in November 2016 has increased nearly 50 per cent. “Over the past two years, and particularly following the demonetisation event in November 2016, the number of credit card accounts has increased nearly 50 per cent, while the number of consumers with a card account has expanded as well,” credit information firm TransUnion Cibil said in its report. Notably, the number of active consumer durable loans has seen a rapid rise of 83 per cent over the past year to reach 1.95 crore at the end of March. This was mainly attributable to a 69 per cent increase in the live borrower count to 1.39 crore.

Notably, the retail lending in India has seen rapid growth in India in as the loan book grew by 25% and the number of outstanding accounts posted a near one-third rise over its previous level, along with an increase in asset quality, due to high demand for consumer durable and personal loans and credit cards, said the report.

Notably, the delinquency rates, i.e, 90 or more days past due (DPD) for major retail lending products declined or remained relatively stable during FY18. Further, the report also found robust growth in all consumption lending products  consumer durable loans, credit cards and

personal loans – during the period under review. “Much of the growth in this product has been driven by issuing higher volumes of smaller ticket loans,” the report said. The report further noted that the average balance per consumer fell by 5.7 per cent to Rs 10,382. Taking stock of the growth specifically relating to credit cards, the number of live accounts

rose over 28 per cent to 3.26 crore, while outstanding balances increased by 43 per cent to Rs 75,100 crore. Consumer usage of credit cards has also increased, with the average credit card balance per borrower rising 12 per cent to Rs 35,495, the firm said in the report.

Going forward, the trend of increasing adoption of digital transaction channels should continue to act as a tailwind for future card growth. Personal loans saw similar growth dynamics, with the number of live consumers increasing by 25 per cent to 1.21 crore, while aggregate balances rising by 49 per cent to Rs 2,72,400 crore. “These positive performance trends indicate that significant growth potential remains for the retail lending market,” said Yogendra Singh, vice-president (research and consulting), Cibil.

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