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Credit card usage, spends shrink month-on-month in April

Credit card usage and spends shrank on a month-on-month (m-o-m) basis in April, shows data released by the Reserve Bank of India (RBI). While the volume of transactions fell 0.37% to Rs 223 million, the value of spends declined 1.5% to Rs 1.05 trillion.

The number of cards in force rose 2% m-o-m in April to over 75 million.

In March 2022, credit card spends across the industry were up 24% m-o-m at Rs 1.07 trillion, leading analysts to expect that spends in April and May would increase further to around Rs 1.1 trillion. A post-pandemic revival in air travel and hospitality were seen to have been driving credit card spends as well as receivables in Q4FY22.

Analysts remain upbeat about a pick-up in payment transactions, encouraged by year-on-year (y-o-y) trends. “Daily payments data for May 2022 from RBI indicates that strong trends in payments continued. We are in a seasonally weak period from a retail spends perspective, but the yearly growth trends are still quite solid, especially when we look at the credit card data,” Kotak Institutional Equities said in a report on Thursday.

On a y-o-y basis, credit card spends jumped nearly 79% in April. However, the RBI data for April 2022 and April 2021 are not strictly comparable, as last year’s numbers do not include the value of credit card transactions made on e-commerce platforms.

Improved utilisation of each outstanding credit card has also encouraged a more upbeat outlook on usage. In a recent report, ICICI Securities pointed out that card receivables have picked up with the outstanding per card at the industry level improving to Rs 20,000 for each month in Q4FY22 from Rs 18,000 in December 2021. “Accordingly, the ratio of credit card to debit card spend at 1.67x as of March 2022 is the highest since April 2019, when it was 1.0x,” the broking firm said.

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