Credit card spends touch record high of Rs 1.22 trillion in September

Banking system saw a net reduction of close to 290,000 cards during this period, impacted by RBI norms warranting deactivation of cards that are inactive for a year

Festival season helped credit card spends touch a record high of Rs1.22 trillion in September. But the banking system saw a net reduction of close to 290,000 cards during this period, impacted by the Reserve Bank of India (RBI) norms warranting deactivation of cards that are inactive for a year.

In September, spending rose 9 per cent month–on–month (MoM) and 53 per cent year-on-year (YoY) and has remained over the Rs1-trillion mark for over six months now, indicating a sustained increase in consumer spends. It is expected to rise further due to the ongoing festival season.

“Spends remained strong and continued their healthy momentum, led by the rising share of e-commerce transactions, which will keep growth in spends buoyant,” said Nitin Aggarwal and Yash Aggarwal, research analysts at Motilal Oswal, in a report.

Among large players, SBI Card, ICICI Bank, and Axis Bank have gained market share in spends as they saw strong MoM growth of 19 per cent, 18 per cent, and 28 per cent, respectively, but HDFC Bank has lost a significant market share.

SBI Card's market share in spends increased by 159 basis points (bps) in September over August, while that of ICICI Bank rose by 142 bps and 162 bps for Axis Bank. On the other hand, HDFC Bank's market share declined by 234 bps.

As of H1FY23, in terms of spends, HDFC Bank has 27.7 per cent market share, followed by ICICI Bank with 19.3 per cent, SBI Card with 18 per cent, and Axis Bank with 9.2 per cent.

The net reduction in credit cards by about 290,000 has meant that the total outstanding credit cards in the system has fallen to 77.7 million. Last month, the outstanding credit card base had dropped to 77.99 million from 80 million in July, thereby losing over 2 million cards in a month. Interestingly, prior to this, the banking system, on an average, was adding 1–1.5 million credit cards a month.

While card additions may see some divergence as banks comply with RBI’s guidelines, incremental sourcing is likely to remain strong. Players such as SBI Card, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank will continue their strong performance, said the Motilal Oswal report.

Kotak Mahindra Bank was the largest acquirer in September with 192,311cards, followed by IDFC First Bank with 90,645 cards, Bank of Baroda with 74,892 cards, and IndusInd Bank with 62,299 cards.

On the other hand, HDFC Bank lost around 100,000 cards, ICICI Bank lost 620,667 cards, and Axis Bank lost around over 54,000 cards.