MUMBAI: The credit card industry seeing a sharp 50% year-on-year decline in new card issuances to a meagre 7.8 lakh in October as against 16 lakh cards issued in the same month last year.
In November 2023, the Reserve Bank, fearing a bubble build-up in the unsecured loans segment, which has been growing at three times the other loans for nearly two years, asked credit card issuing banks to set aside 25 percentage points more money as risk capital, taking the total to 150%.
Still, banks continued to aggressively push credit cards and since the second quarter almost all lenders have begun to report higher delinquencies. The worst affected ones are Kotak Mahindra Bank, RBL Bank, and Axis Bank, among others.
Domestic brokerage Anand Rathi stated that the industry; led by HDFC Bank with about 24% market share followed by SBI Card with close to 20%, ICICI Bank and Axis Bank; has added only 7.8 lakh new credit cards in October. May 2024 was the lowest in many years when the industry added just 7.6 lakh customers.
But on an annulaised basis, the October numbers as much as 45% less than what the industry did last year.
Despite this decline, net additions in October 2024 were higher than in June 2024, contributing to a 16% quarter-on-quarter rise in cards in force, the report said.
The report also highlights the total spending through credit cards reached Rs 1.78 trillion in October 2024, reflecting a 13% YoY growth.
According to the report, the share of the e-commerce segment in total spending value dropped to 61% in October from 65% in September, while point of sale transactions saw its share rising to 39% from 35% in the previous month.
PoS and e-commerce volumes continued to move in favour of the former, now nearly 51%, while the latter’s share declined to about 49%, while in terms of transaction volume, the preference continued to move towards PoS transactions, which now account for nearly 51% of total credit card transactions.