In February, credit card spending in India surged by 26 per cent year-on-year (YoY) reaching Rs 1.5 lakh crore as per data from the Reserve Bank of India (RBI). This growth occurred despite some restrictions on business payments and increased risk associated with retail lending. With the rise in credit card transactions, brokerage firms are keeping an eye on banks' asset quality going forward.
Around 1.1 million new credit cards were issued in February with HDFC Bank leading the pack, according to JPMorgan analysts. The total outstanding amount owed on credit cards across the industry increased by 21 per cent year on year. Analysts stress the importance of monitoring asset quality given the uptick in issuances.
However, some issuers faced challenges due to restrictions on commercial card arrangements as noted by HSBC analysts. They expect SBI Cards to suffer market share losses following a drop of 285 basis points month-on-month in spend market share.
In the month, credit card spending also saw an increase of 30 per cent YoY totaling Rs 1.7 lakh crore.
The increase was mainly fueled by online shopping and paying bills, which together made up over half of all transactions.