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Credit card base grows fastest in nearly two years in March

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India’s credit card user base increased at the fastest pace in 23 months in March 2022, suggesting a return to pre-Covid-era trends. Card spends also crossed the TRs 1-trillion mark during the month.

According to data released by the Reserve Bank of India (RBI), the banking system reported net additions of 1.9 million credit cards during the month.

The total credit card base stood at 73.6 million, up 18.7% year on year (YoY).

Axis Bank emerged as the largest acquirer during the month, adding 433,966 cards, followed by HDFC Bank, which issued 263,864 credit cards in March. Credit card spends grew 48% YoY to TRs 1.07 trillion. Analysts at Motilal Oswal Financial Services (MOFSL) wrote in a report that spends have continued a healthy momentum led by a rising share of e-commerce transactions that will keep the growth buoyant. “We believe that players such as SBI Card/ICICI Bank/Axis Bank would continue to show strong performance, while HDFC Bank is witnessing a strong recovery, which is likely to continue,” the report said.

Monthly spends per card for the industry rose 21% from February levels to TRs 14,600, much higher than pre-Covid levels, according to MOFSL analysts. The average ticket size increased to TRs 4,800 from TRs 4,566 a month ago, as did the number of transactions per card to three from 2.6.

Bankers maintain that spends are benefiting from the receding of successive waves of the pandemic and improved consumption trends. Anup Bagchi, executive director, ICICI Bank, had told analysts last month that spends were slowly increasing.

“We are certainly seeing consumption coming up as Covid-19 normalises,” Bagchi said. “So we are seeing now spends coming up and revolve also slowly moving up.” Despite a pick-up in card spending, banks continue to see low rates of revolving behaviour, or the tendency to defer card repayments, which allows banks to earn interest. Market leader HDFC Bank said in April that it is still at about 70% to 80% of the pre-Covid levels on the revolver rate.

Srinivasan Vaidyanathan, chief financial officer, HDFC Bank, said, “The customer needs to start to revolve. I can see that it’s turning the corner [and is] one percentage point better, but there’s some way to go.”

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