Credit card dues hit an all-time high in January

The highest growth of 30.7 per cent was registered in June. (Representative)

New Delhi:

Credit card outstanding rose 29.6 per cent to an all-time high of Rs 1.87 lakh crore in January, driven by increased digitization and rising consumer confidence in the post-Covid era.

According to the latest data from the Reserve Bank, credit card dues have registered a growth of over 20 per cent in the 10 months of the current financial year.

The highest growth of 30.7 per cent was registered in June.

Ram Mohan Rao Amara, MD & CEO, SBI Card, said, “Digitisation of multiple categories has resulted in increased spending by existing customers using their credit cards.”

The ease of payment has definitely contributed to the increase in spending in categories including health and fitness, education, utility bills, among others, he said.

On the monthly trends in credit card usage, Ram Mohan Rao Amara said that there has been a steady rise in credit card spends over the past few months.

In January this year, he said that card spend was expected to be Rs 1.28 lakh crore in December 2022 as compared to Rs 1.26 lakh crore.

“If one looks at the year-on-year growth, it has increased by 45 per cent. In fact, credit card spends have remained above Rs 1 lakh crore continuously for the last 11 months,” he added.

At the end of January 2023, around 8.25 crore credit cards were issued by various banks.

HDFC Bank, SBI Cards, ICICI Bank, Axis Bank and Kotak Bank are the top five credit issuers in the country.

V Swaminathan, executive chairman, Andromeda Loans, said while secured loans like mortgage loans and business loans have taken a back seat these days, the personal loan segment is growing.

“New graduates, who are just entering the workforce, are more financially aware than their predecessors and are actively trying to build their credit scores. With more fintech companies building an online presence and sharing information Young people are making more informed credit card purchases,” he said.

The Reserve Bank data also showed that the annual growth in credit card outstanding stood at 29.6 per cent in January 2023, as against around 10 per cent in the year-ago month. Since then the outstanding amount has increased from Rs 1,41,254 crore in January 2022 to Rs 1,86,783 crore in January this year.

According to a recent RBI survey, consumer confidence has further improved for both the current period as well as the year-ahead.

The current situation index for the ninth survey round continued on its recovery path since the historic low recorded in mid-2021 and increased by 1.3 points in January 2023 on the back of improved sentiments on general economic conditions and household income, the survey said. Is. February 8, the day the bi-monthly monetary policy was unveiled.

Rao further said that e-commerce spends accounted for about 60 per cent of the total credit card spends during December 2022.

“So, overall, we are seeing a normalization in spending that is comparable and in fact even better than pre-COVID levels. And with the upcoming Holi and summer holiday season, we are likely to see a normalization in the coming months as well. The pace may continue, depending on the operating environment,” said a top SBI Card official.

Swaminathan further said that during the pandemic, credit cards were mainly used to buy groceries and pay utility bills. There has been a massive drop in discretionary spending on fuel, travel and entertainment.

“In 2023, with the economy returning to its pre-pandemic state, people are using credit cards to travel, spend on fuel, renovate their homes, buy appliances and so on. Travel and entertainment are the two broadest categories that have picked up momentum after the pandemic,” he said.

At the end of January 2023, around 8.25 crore credit cards were issued by various banks.

HDFC Bank, SBI Cards, ICICI Bank, Axis Bank and Kotak Bank are the top five credit issuers in the country.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)