A relatively new strategy among India’s credit card issuers to target premium customers and shed risky accounts is working even as card spending has declined in the country month-on-month, data from the country’s central bank suggests.
Indian consumers in June spent 72 billion rupees (US$1.6 billion or 1.1 billion euros) using credit cards, up 30% from 55.4 billion rupees during the same month last year, according to the Reserve Bank of India.
They initiated 24.2 million credit card transactions, up 20.4% from 20.1 million, while the number of credit cards in circulation as of the end of June fell 6.3%, to 17.7 million from 18.9 million a year earlier.
Mrinalini Manral, a Mumbai-based independent banking analyst, tells PaymentsSource banks are now targeting premium middle to high-income customers who not only will spend more but also will pay back their card loans.
“Earlier the banks were very loose in issuing cards but they are now desperate to keep their books healthy and not have bad loans on their hands like in the slowdown,” she says.
Though up from a year earlier, spending and card use in June was down considerably from May, when cardholders spent 78.8 billion rupees and conducted 25.3 million credit card transactions, the data show.
Manral attributes the difference to fewer consumers going out to shop, eat or drink because of the hot summer weather that peaks in June.
Meanwhile, debit card sales volume in June increased 45.9%, to 37.8 billion rupees from 25.9 billion rupees a year earlier. Debit card transaction volume increased 42.3%, to 23.9 million from 16.8 million, the central bank says.
Debit card spending also dropped from May, when cardholders spent 42 billion rupees and conducted 24.3 million transactions. According to Manral, debit card spending too was affected by the same hot weather.
Indian financial institutions had issued 239.5 million debit cards as of the end of June, up 24.7% from 192 million a year earlier.
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