India's Credit Card Spending Surges 23% Year-on-Year to ₹2.17 Lakh Crore in September

Credit card spending in India experienced a robust year-on-year growth of 23 percent, totaling ₹2.17 lakh crore in September. This surge was primarily driven by increased discretionary consumption, stimulated by festive season promotions, reduced Goods and Services Tax (GST) rates, and a rise in the issuance of new credit cards. On a month-on-month basis, spending grew by 13 percent, indicating strong consumer sentiment.

The total number of outstanding credit cards expanded to 11.3 crore in September, a 7.0 percent increase year-on-year. Private sector banks have been instrumental in this growth through strategic acquisitions and digital offerings. However, their growth pace moderated as they prioritized customer quality amidst increasing delinquencies in unsecured lending. Consequently, the market share of public sector banks increased, while private sector banks saw a slight decline. Public sector banks' spending market share improved, driven by wider reach in smaller cities and government initiatives.

Average spending per card also saw a significant rise of 15 percent year-on-year, reaching ₹19,144. This was supported by festive demand, growth in e-commerce, and attractive reward programs. Customers of private sector banks spent an average of ₹20,011 per card, while public sector banks saw a substantial 30 percent jump to ₹16,927 per card, reflecting their enhanced digital engagement and competitive offers. Outstanding credit card balances, while slightly down from the previous month, increased year-on-year, with their share in total retail loans showing a slight decrease, suggesting healthy repayment patterns.

Impact This news indicates strong consumer demand and economic activity in India, positively impacting the financial sector, particularly banks and credit card companies. It suggests a healthy credit environment, which can lead to improved earnings for financial institutions and boost sectors reliant on consumer spending. Rating: 7/10

Heading: Difficult Terms Explained * Year-on-year (y-o-y): A comparison of financial data between the current period and the same period in the previous year. * Month-on-month (MoM): A comparison of financial data between the current month and the previous month. * Discretionary consumption: Spending on non-essential goods and services, such as luxury items, entertainment, and dining out. * Card issuances: The process by which new credit cards are approved and provided to customers. * Private sector banks (PVBs): Banks that are owned by private shareholders, such as HDFC Bank, ICICI Bank, and Axis Bank. * Public sector banks (PSBs): Banks that are majority-owned by the Indian government, such as State Bank of India, Punjab National Bank, and Bank of Baroda. * Delinquencies: The failure to make required payments on a loan or debt, leading to a borrower being in default. * Unsecured lending segment: Loans that are not backed by collateral, such as personal loans and credit cards, which carry higher risk. * Basis points (bps): A unit of measure used in finance to describe the percentage change in a financial instrument. One basis point is equal to 0.01% (1/100th of a percent). * Tier-2 and Tier-3 cities: Cities that are smaller in population and economic activity compared to Tier-1 cities. * E-commerce: The buying and selling of goods and services over the internet. * Reward programs: Incentive schemes offered by credit card companies to customers for spending, such as points, cashback, or travel miles. * Retail loans: Loans provided to individual consumers for personal use, such as home loans, car loans, and personal loans.