Indian banks, which over the last year began targeting more-upscale credit card customers who spend more and tend to stay current on their accounts, are seeing gains in credit card spending volume despite having fewer cards in circulation.
Indian consumers in July spent 74.7 billion rupees (US$1.5 billion or 1.14 billion euros) using credit cards, up 28.4% from 58.2 billion rupees during the same month last year, according to the Reserve Bank of India.
Customers initiated 25 million credit card transactions, up 14.7% from 21.8 million, while the number of credit cards in circulation as of the end of July fell 6.9%, to 17.6 million from 18.9 million a year earlier.
Mrinalini Manral, a Mumbai-based banking analyst, tells PaymentsSource banks in India over the last year have now shifted to a new strategy of targeting premium customers and shedding risky accounts.
"The strategy seems to be working if we go by the evidence that even as card numbers have declined in the country year-on-year, the spending on the cards continues to grow," Manral says.
She adds that the previous strategy of banks issuing cards to broader audiences in order to gain market share seems to be a lower priority, as many banks experienced losses from bad loans during the global recession.
Meanwhile, debit card sales volume in July increased 58.3%, to 45.9 billion rupees from 29 billion rupees a year earlier. Debit card transaction volume increased 41.5%, to 26.6 million from 18.8 million, the central bank says.
Indian financial institutions had issued 243.3 million debit cards as of the end of July, up 24.4% from 195.6 million a year earlier.
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