Credit card spending rises 30% a year even as loan growth slumps

Experts say the numbers at credit card base are not increasing at faster than expected rates but the spending per card has been increasing rapidly

Loans for the banking sector are growing at a slower than expected rate but growth in credit card spending seems an exception.

Banks and other experts say credit card spending is rising upwards of 30 per cent annually. Some entities are growing at an even faster rate.

“At Axis Bank, the credit card spends have been growing at 80 per cent on a year-on-year basis," said Jairam Sridharan, its head for consumer lending and payments.

In April last year, Axis Bank saw a value transaction of Rs 31.77 million on ATMs and of Rs 5,845 mn on Point of Sales (POS) terminals. This April, on ATM it had shot up to Rs 88.8 mn and on POS to Rs 10,340 mn. In combined value, a jump of 77 per cent.

Experts say the numbers at the credit card base are not increasing at faster than expected rates but the spending per card has been increasing rapidly. The idea at banks now seems to be on increasing the spending per card than increasing the number of cards, says experts.

Sridharan explains the rise in e-commerce has led to an increased usage of plastic money. “The rise in online transactions across sectors has encouraged more people to come online and transact. More, once people start, they understand the convenience factor that comes with it and that is why more and more people are using it and spending via it,” he added.

Sumant Kathpalia, head of consumer banking at IndusInd Bank, added the increase in the offers being doled out attract consumers, leading to several people increasingly using credit cards for shopping and other services. For IndusInd, credit card spending rose 21 per cent over a year as of this April.

An executive with a public sector bank says it is not only the credit card spending but even the credit limits for consumers which have been going up. “Card spends are increasing and most consumers are not even revolving the card dues. As a result, banks have been more relaxed on increasing the credit limit for consumers,” he added, requesting anonymity.

He said the credit limit was being increased by 10-15 per cent and was higher by up to 20-25 per cent for high spenders with a good credit history.

According to a Worldline India report, an entity in payments and transactional services, in the number of credit cards in the market, HDFC Bank leads with a 27 per cent share, followed by ICICI Bank at 17 per cent and SBI Cards at 15 per cent.
PLASTIC FANTASTIC

• 30% a year The rate at which credit card spending is rising
• 80% a year The rate at which Axis Bank  credit card spends have been growing
• 21% a year For IndusInd Bank
• 10-15% The rate by which card limit was being raised, a PSB executive said