Outstanding credit cards, or credit cards-in-force, fell for the second straight month in September as issuers shut inactive cards to comply with the Reserve Bank of India’s guidelines.

Cards-in-force fell 0.4 per cent, or by 2.9 lakh, on month to 7.8 crore as of September 30, on a net basis. However, several issuers saw a much steeper fall of up to 8-9 per cent, with foreign banks and large private banks facing much of the brunt of the regulatory norm.

The central bank has asked issuers to deactivate credit cards--unused for over one year – with effect from July 1. Further, issuers are required to close cards that have not been activated for 30 days since issuance from October 1.

On a gross basis, cards for issuers that saw a decline, were lower by 2.4 per cent or by 11.0 lakh. This was largely off-set by an increase of 2.6 per cent in outstanding cards of issuers that saw a rise by 8.1 lakh cards.

Bank of America, Standard Chartered Bank, ICICI Bank, Bank of India, HSBC, American Express and Citibank saw the largest percentage decline in cards, whereas DCB Bank closed down all of its 3,382 cards-in-force as at the end of August. In August, HDFC Bank had seen a decline of 8 per cent in outstanding cards to 1.6 crore cards, whereas Axis Bank had seen a decline of 10 per cent to 89 lakh cards.

On the other hand, DBS Bank, SBM Bank India, Federal Bank, South Indian Bank, AU Small Finance Bank, IDFC First Bank and Bank of Baroda saw a bulk of the card accretion during September. Kotak Mahindra Bank was the largest acquirer, issuing 1.9 lakh more, followed by IDFC First Bank with 90,645 new cards, Bank of Baroda with 74,892 cards, and IndusInd Bank with 62,299 cards.

Card spends

Momentum on card spends continued to be strong despite the decline in card numbers and buoyed by festival season demand. Card spends rose 9.1 per cent on month to ₹1.2-lakh crore in September. On year, card spends were 53 per cent higher.

“Spends remained strong and continued their healthy momentum over September, led by the rising share of e-commerce transactions, which will keep growth in spends buoyant,” Motilal Oswal Securities said in a note.

“While cards additions may see some divergence as banks comply with RBI’s guidelines, incremental sourcing is likely to remain strong,” it added.

State Bank of India, ICICI Bank and Axis Bank gained market share with their card spends increasing by 19-28 per cent, but HDFC Bank lost market share by 234 bps. For H1FY23, HDFC Bank had a market share of 28 per cent market share, followed by ICICI Bank with share of 19 per cent, SBI Card with 18 per cent and Axis Bank with 9 per cent.