Credit card spending surges to record high of Rs 1.4 lakh crore in May

According to the latest data from the Reserve Bank of India (RBI), credit card spending in May reached a record high of Rs 1.4 lakh crore. The total spending on credit cards has been steadily increasing by 5 per cent month-on-month this year, compared to the range-bound performance seen in the previous fiscal year.

The number of active credit cards has also witnessed a significant increase, surpassing 87.4 million in May. Since January, over 5 million new credit cards have been added, with 2 million cards being used in the first two months of the current fiscal year alone.

In January 2023, there were 82.4 million active credit cards in the country. The number has steadily risen to 83.3 million in February, 85.3 million in March, and 86.5 million in April, as per the RBI data.

While credit card spending during FY23 remained within the range of Rs 1.1-1.2 lakh crore, May of this year witnessed an all-time high of Rs 1.4 lakh crore. The average spend on a credit card also reached a new peak of Rs 16,144.

HDFC Bank, the market leader, has the highest number of cards in circulation at 18.12 million in May. The bank also holds the largest market share of outstanding dues, accounting for 28.5 per cent of the total industry-wide dues.

SBI Card follows closely with 17.13 million cards in circulation, followed by ICICI Bank with 14.67 million. Axis Bank is the fourth-largest issuer with 12.46 million cards, and its acquisition of the retail portfolio of Citi has helped it narrow the gap with ICICI Bank.

However, there are growing concerns about rising stress levels among individuals. A recent Transunion Cibil report highlighted an increase in delinquencies in the credit card portfolio of banks. The delinquency rate rose by 66 basis points to 2.94 per cent  in March 2023. The report also noted that credit cards and personal loans experienced the fastest growth.

In terms of asset quality, credit card balances unpaid for over 90 days stood at 2.94 per cent , marking a 0.66 per cent  increase compared to the same period last year. However, the delinquency rate for personal loans improved slightly by 0.04 per cent  to 0.94 per cent , according to Cibil.

In terms of loan growth, outstanding credit card balances increased by 34 per cent  in the year leading up to March 2023, while personal loans saw a growth of 29 per cent.

(With PTI Inputs)