IANS | 28 Nov, 2024
The festive season in India has experienced significant growth across various metrics, with credit card expenditures surpassing Rs 2 lakh crore in October, marking a 14.5 percent increase compared to September. Recent data from the Reserve Bank of India (RBI) indicates that credit card spending in October reached Rs 2.02 lakh crore, reflecting a year-on-year growth of 13 percent.
According to the Central Bank's statistics, the total number of outstanding credit cards rose by 12.85 percent, reaching 106.88 million, which is a 0.74 percent increase from the previous month. HDFC Bank topped the list by issuing 241,119 credit cards, followed by SBI Cards with 220,265 and ICICI Bank with 138,541 cards.
In contrast, the rise of UPI-based digital payments has led to a decline in debit card transactions, which fell nearly 8 percent from approximately Rs 43,350 crore in August to around Rs 39,920 crore in September, as per the RBI's monthly report. Conversely, credit card transactions in the country increased by nearly 5 percent in September, reaching Rs 1.76 lakh crore, up from Rs 1.68 lakh crore in August.
Market analysts attribute the surge in credit card spending to a lower base from the previous year and the festive season, which has seen an increase in promotional offers such as equated monthly installments. The proportion of digital payments has more than doubled, rising from 14-19 percent in March 2021 to 40-48 percent in March 2024, with the unified payments interface (UPI) playing a crucial role in this growth.
UPI transactions have experienced remarkable growth, achieving a Compound Annual Growth Rate (CAGR) of 75 percent, while UPI spending has surged at a CAGR of 68 percent from August 2019 to August 2024, in contrast to the relatively modest growth in the credit card sector. The popularity of UPI is underscored by its transaction volume, which is 38.4 times greater than that of credit card transactions, according to a recent report by Axis Securities. However, due to the smaller average size of UPI transactions, the ratio of UPI to credit card spending remains stable at 0.3 times as of August.
