In Mumbai: Credit card fees have increased by nearly 30% in a year, twice as quickly as total bank loans. In April, credit card debt surpassed Rs 2 billion for the first time. Despite the Reserve Bank of India's caution regarding the rise in unsecured bank credit, lenders assert that there are no major concerns due to the small percentage of credit card dues. In April 2023, credit card balances reached Rs 2,00,258 crore, or 29. 7 percent more than April 2022.
Not only is debt increasing, but also the increased use of credit cards for payments and inflation are contributing factors to the increase in credit card fees. Credit card balance sheet growth is trending in the same direction as consumer spending on credit cards. Consumer spending has also increased over the past year, according to Axis Bank president and head (cards & payments) Sanjeev Moghe. The total value of all online credit card transactions in April 2023 was just over Rs 1. 3 lakh crore.
Although an increase in credit card transactions is typically regarded as a sign of consumer confidence, an increase in outstanding balances may also be the result of inflation, in which consumers pay more for the same goods and services.
Card balances make up 1 percent of total bank credit. 4%. They are the third-largest category of personal loans, after housing (14). 1 percent) and auto loans 7%).
Credit card debt had reached a record high of one percent. 2 percent, just prior to the 2008 global financial crisis. After de-flaws in little ticket individual advances and the ensuing tidy up, the portion of card duty stayed beneath 1% for the following ten years. In August 2019, they once more crossed the 1% threshold, and ever since then, they have steadily increased.
However, in contrast to 2008, bankers claim that card issuances are restricted to creditworthy customers today. The availability of data through tax, account aggregator, credit bureau, and other platforms has improved the efficiency of appraisals. Additionally, banks now have a wider reach than target-driven direct selling agents due to the digital onboarding of the majority of customers.
India has one of the lowest credit card penetration rates in the world, despite rising spending and card ownership. A private bank executive stated, "Less than 5% of the population has credit cards, which is lower than many developing countries."
The RBI reports that the industry's share of bank credit has decreased to 24 in the year that ended April 2023. 3% from 26. 3%.