The total credit card outstanding in the current financial year so far, has increased significantly, at 29.6 per cent, compared with last year, according to Reserve Bank of India (RBI) data.

The credit card outstanding stood at ₹1,86,783 crore as on January 27, 2023, (first 10 months of FY23) as against ₹1,44,162 crore in the year-ago period. In the comparable period of FY22, credit card outstanding grew by 9.3 per cent compared with the previous financial year (FY21).

“Credit card usage has recently surged due to an increased discretionary spending on vacation, travel, entertainment and consumer durables,” BIbekananda Panda, Senior Economist, State Bank of India, told businessline.

‘Dramatic shift’

“Following the pandemic, the credit card space has undergone a dramatic shift as ease of payments, mass acceptance of credit cards without additional fee. An analysis of the RBI data shows that the spurt in credit card outstanding is primarily driven by positive factors,’‘ Panda added.

According to Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, Crisil Ratings, this is “clearly a reflection of the economy bouncing back’‘ and rebounding well after the pandemic.

“We see a spurt in card usage in hospitality, travel/leisure, utility bill payments, healthcare, education, consumer durables, and e-commerce in general. More than 60 per cent of the card spends are now for online transactions. There has been a growth in incremental spends as well as spend per card. Cards in force have also gone up. From an asset quality perspective, we are not seeing any material increase in delinquencies as of now but that is what will be important to monitor and manage if NPAs are to be kept under control,” he added.

The incremental credit card spend in the current financial year so far (till January end) has gone up by 50 per cent along with an increase in spend per card. The current data should be read in the context of low credit card penetration in India, said Prasanna Tantri, Executive Director, Centre for Analytical Finance, Indian School of Business (ISB).

“The total outstanding credit card balance is less than 2 per cent of bank credit and 2.5 per cent of our annual savings,’‘ he added.