Credit card base shrinks more

The number of outstanding credit cards in the country declined for the fourth straight year in 2011-12 even as private sector and foreign banks in India have started to expand this business aggressively for the last 12-18 months.

According to the the Reserve Bank of India data, the number of outstanding cards in the country at the end of last financial year was 17.65 million. In 2010-11 the number was 18.04 million while in 2009-10 it was 18.33 million. Year-on-year growth in credit cards was last seen in 2007-08 when the base increased to 27.55 million from 23.12 million a year earlier.

There was some improvement on a month-on-month basis. In March the number of credit cards was 17.65 million against 17.57 million in the previous month.

“Post financial crisis of 2008-09, most banks in India had wind down this business to protect the quality of their assets. While banks have started growing their credit cards portfolio since 2010-end there is still some time left for the cards base to reach the pre-crisis peak. Probably, by the end of this financial year or early next year we will see some modest growth in the total number of cards," a senior executive in charge of credit cards business of a large European bank in India said.

While credit cards number continues to shrink, spends have started to increase reflecting that plastic money is gaining credence among Indian consumers.

In 2011-12, credit card spends were at Rs 96,613 crore compared with Rs 75,516 crore in the previous year.