MUMBAI - Credit card spending in India saw a significant boost during the October festive season, with a nearly 40% increase to ₹1.78 lakh crore compared to the same period last year. This surge is attributed to the festive shopping enthusiasm and a lower base figure from the previous year. The Reserve Bank of India (RBI) reported an increase in active credit cards in circulation, reaching 9.5 crore, marking a 1.8% rise.
The Indian banking sector experienced varied performances among its players. HDFC Bank and ICICI Bank led the charge, issuing new credit cards at a combined rate of 42%. Despite this, HDFC Bank witnessed a decline in its share of market spends in October. Nevertheless, HSBC Global Research projects that HDFC will see a recovery in its market spend share. Meanwhile, smaller institutions like AU Small Finance Bank are making significant strides by capturing larger portions of the market.
The RBI's recent move on November 16 to revise risk weights on credit card receivables for banks to a higher level of 150% suggests a shift towards tighter control over unsecured lending. This change is expected to impact the economics of credit cards across the industry. Despite these regulatory adjustments, SBI Cards showcased robust growth in market spending by 42%, even as it underwent a slight reduction in total cards due to the cancellation of inactive ones and recalibrated issuances. BofA Securities expressed a bullish outlook on SBI Cards' future prospects amidst these developments.
As consumers continue to embrace credit for their festive purchases, the Indian credit card industry appears resilient, adapting to both regulatory changes and shifting market dynamics.
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