Credit card spends fall month-on-month in November as festive season effect wears off

However, banks have become more cautious about issuing credit cards amid the two waves of the pandemic. As a result, outstanding credit card receivables have been growing slower.

Having come back from an embargo on new issuances in August, HDFC Bank emerged as the largest issuer of new cards in November, issuing over three lakh new cards during the month.
Having come back from an embargo on new issuances in August, HDFC Bank emerged as the largest issuer of new cards in November, issuing over three lakh new cards during the month.

Spends on credit cards fell 12% month-on-month (MoM) in November as the effect of festive-season spending wore off. The value of credit card transactions at point of sale (POS) terminals and ATMs declined to `89,490 crore in November from Rs 1.01 lakh crore in October, according to Reserve Bank of India (RBI) data. However, spends were 43% higher on a year-on-year basis.

In a report on digital spends, analysts at Motilal Oswal Financial Services said monthly spend per card for the industry moderated to Rs 13,200, even as it remained higher than the average of Rs 11,000 over the past one year, which is also higher than their pre-pandemic levels. “This was due to a decline in the ticket size to Rs 4,400, while the number of transactions per card too moderated to three v/s 3.3 in Oct ’21 (3.1 in Mar’21),” the report said.

Having come back from an embargo on new issuances in August, HDFC Bank emerged as the largest issuer of new cards in November, issuing over three lakh new cards during the month.

Credit offtake showed signs of recovery with the onset of the festival season in October. According to the latest set of numbers released by the RBI, the non-food credit grew 7.51% YoY during the fortnight ended December 3, holding strong a month after Diwali.

Recent months have seen credit card issuances pick up. In its December 2021 of the financial stability report (FSR), released on Wednesday, the RBI said the overall demand for consumer credit, as reflected in inquiry volumes, has recovered following a dip on account of the second wave. “The upturn is led by demand for personal loan and credit card segments while demand from other product categories shows signs of stabilisation,” the FSR said.

However, banks have become more cautious about issuing credit cards amid the two waves of the pandemic. As a result, outstanding credit card receivables have been growing slower.

According to the RBI’s latest report on the trend and progress of banking in India, in the first six months of FY22, receivables grew just 2.2% YoY, against 4.9% for the full year FY21 and 18.6% in FY20.

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