Growth In Credit Card Spending Drop To 13% YoY In Aug : Report
Nomura report highlights drop in card issuance, spending, and loan growth as caution grows
Credit card spending and loan growth in India are showing signs of slowing down as lenders place greater emphasis on maintaining asset quality, according to a recent report by Nomura. Data from the Reserve Bank of India (RBI) revealed that credit card spending growth slowed down to 13 per cent year-on-year in August 2024, down from 19 per cent in July.
The report points out a continuing decline in the number of credit cards issued and overall spending, with financial year 2025 (FY25) year-to-date growth at 17 per cent, significantly lower than the 28 per cent seen in the previous fiscal year. Even with the upcoming festive season, any surge in spending is expected to be limited, mainly due to last year’s strong base and cautious lending strategies being adopted by banks.
For five consecutive months, the number of new credit cards added has remained below the 1 million mark, with just 0.9 million net additions recorded in August 2024. The growth rate of outstanding credit cards also slowed to 16 per cent year-on-year in August, compared to 19 per cent in FY24, as major lenders have become more selective in issuing new cards amidst concerns over asset quality.
Average monthly spending per credit card stood at Rs 16,000 in August 2024, representing a 2 per cent year-on-year decline. Additionally, the annualised spend per card for April-August 2024 was Rs 1.87 lakh, showing only a 1 per cent rise compared to a 7 per cent increase in FY24 and a 27 per cent jump in FY23. This slowdown is largely attributed to the base effect and high-value purchases made post-pandemic.
The reduction in the issuance of credit cards and the drop in spending have also impacted loan growth, with a deceleration already visible in Q1 FY25 financial results. This trend is anticipated to continue in the coming quarters.
Further, lenders are now scaling back credit card rewards and shifting their focus from growth to profitability, as indicated by the increasing number of overdue accounts, which signals a decline in asset quality. This cautious approach shows the lenders’ intention to safeguard their financial health amidst changing market situations.(ANI)
