A stable and growing Indian economy is helping revive credit card use, which had dropped considerably during the economic slowdown, data from India’s central bank reveal.
Indian consumers in March spent 69.7 billion rupees (US$1.5 billion or 1.1 billion euros) using their credit cards, up 22.1% from 57.1 billion rupees during the same month last year. They also initiated 23.4 million credit card transactions, up 13.6% from 20.6 million, according to the Reserve Bank of India.
The number of credit cards on issue as of March 31 fell marginally by 1.6%, to 18 million from 18.3 million a year earlier. The growth in card activity and spending despite the reduction in cards suggests banks’ strategy of concentrating on the premium card segment of high-net-worth individuals is paying off, Mrinalini Manral, an independent banking analyst based in Mumbai, tells PaymentsSource.
“The global financial crisis, [which] had a moderate effect in India, saw a lot of banks moving away from the strategy of market share first, profits second when it comes to the card business,” she adds.
Debit card sales volume in March increased 38.8%, to 33.6 billion rupees from 24.2 billion rupees a year earlier. Debit card transaction volume in March increased 36.5%, to 21.3 million from 15.6 million, the central bank says.
Indian financial institutions had issued 228 million debit cards as of the end of March, up 25.3% from 182 million a year earlier.
According to Manral, debit card usage in India will continue to grow exponentially as the central bank achieves its financial inclusion targets and more and more people are issued debit and ATM cards.
With the economy improving, overall card use should grow even more as Indian consumers increase their spending during the summer holidays, which includes spending on travel and hospitality, an official from the central bank tells PaymentsSource.
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