The momentum in credit card spends continued in January, with spends topping Rs 1 trillion for the 11th month in a row due to a rise in e-commerce transactions and discretionary spending, including travel.
According to data released by the Reserve Bank of India (RBI), credit card spends stood at Rs 1.27 trillion in January, up marginally from Rs 1.26 trillion in December despite a very high base. Year-on-year, spends increased 45 per cent in January.
Online e-commerce spends constituted almost 60 per cent of the total credit card spends in January. The rest of it came from point of sale (PoS) transactions.
While major credit card issuers — ICICI Bank, Axis Bank, and SBI Card — saw a single-digit increase in spends in January over December, largest issuer HDFC Bank’s spend declined 1.29 per cent during this period.
Travel and hospitality spending come back strongly after a subdued show during the Covid-19 pandemic. This recovery is aiding growth in credit card spends. In fact, credit card spends touched an all-time high of Rs 1.29 trillion in October 2022 due to festive season spending.
Meanwhile, net addition of cards picked up in January, after a subdued December, with the banking system adding about 1.26 million, taking the outstanding card base to 82.45 million. In December, net credit card additions were to the tune of 580,555 cards.
On an average, the industry has been witnessing a net addition of over 1.5 million credit cards monthly. This is because companies have become aggressive in the unsecured lending business after the pandemic. The progress excludes the two months when the industry saw a net reduction in credit cards as the RBI’s norms kicked in. The norms mandated card issuers to deactivate credit cards inactive for a year.
The banking industry added about 1.3 million cards in November and 1.66 million in October.
The net addition of cards in January was led by SBI Card (326,236), followed by HDFC Bank (223,018), Axis Bank (142,238), and ICICI Bank (128,164).
Among the major players, HDFC Bank has a market share of 27.59 per cent in spends and about 20.90 per cent in credit cards in force (CIF). It was followed by SBI Card with 19.02 per cent and 19.66 per cent, in spends and CIF, respectively.
Meanwhile, ICICI Bank had a market share of 17.07 per cent and 16.56 per cent in terms of spends and CIF, respectively. Axis Bank’s market share stood at 9.21 per cent while CIF was 11.62 per cent.