MUMBAI : Credit card spends dropped by over 12% or ₹13,968 crore between 28 February and 30 April as the demand and consumption slowed down during the lockdown, shows data from the Reserve Bank of India (RBI).
The credit card outstanding as on 24 April is ₹96,978 crore, the data showed. Even on a month-on-month basis – between 27 March and 24 April – it has seen a decline of 10.28%. Earlier in July 2019, the outstanding had slipped by less than 1% on a monthly basis.
The decline in the credit card spends can be attributed to restricted spending avenues due to the nationwide lockdown that began 25 March. While retail outlets across the country remained shut, even e-commerce portals were delivering only essentials to start with. Besides, holidays and air ticket bookings, one major source of credit card transactions was hit. As the economic activities resume across the country with eased restrictions, credit card spends may also rise.
Large private sector banks have acknowledged the fall in credit card spends. For instance, Srinivasan Vaidyanathan, chief financial officer, HDFC Bank told analysts on 18 April that credit card spends in March were lower than the average January and February by about 21%.
“The second half of March was particularly impacted, as the card spends was lower by 35% compared to the average of January and February," he said. The bank has a credit card base of 14.5 million as on 31 March.
For Axis Bank, credit card spends fell to ₹18,321 crore in the March quarter from ₹20,556 crore in the December quarter of FY20. The bank has 7 million cards in force as of 31 March.
Pralay Mondal, executive director (retail banking), Axis Bank told analysts on 28 April that the bank will move more and more towards the secured business this year.
“And in unsecured, I have been talking about it for a while that we have upped our credit score and our credit bar significantly higher, especially as we are going to credit cards and some of the unsecured businesses," said Mondal.
Meanwhile, RBL Bank, with 2.75 million cards in force, saw a slight uptick in credit card spends at ₹8,327 crore in Q4 FY20, as compared to ₹8,287 crore as on 31 December.
Harjeet Toor, head (retail, inclusion & rural business), RBL Bank said on an analyst call on 7 May that the usual growth in spend was countered by the drop seen in March post lockdown.
“Approximately ₹500 crore of spends were lost on account of the lockdown," said Toor. In credit cards, accounts for 18% of RBL’s advances, approximately 13% of its cardholders have availed of the moratorium.
Toor added that in the credit card segment, the bank has seen a unique behaviour in terms of customers trying to conserve their cashflows and opt for a moratorium, across salaried and self-employed segments.
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