Credit card spending drops month-over-month in November as holiday effect wears off

Credit card spending fell 12% month-on-month (MoM) in November, as the effect of holiday season spending wears off. The value of credit card transactions at point of sale (POS) terminals and ATMs declined to 89,490 crore in November from Rs 1.01 lakh crore in October, according to data from the Reserve Bank of India ( RBI). However, spending increased 43% year over year.

In a report on digital spending, analysts at Motilal Oswal Financial Services said monthly card spending for the industry moderated to Rs 13,200, although it remained above the average of Rs 11,000 over the course of the year. of the past year, which is also above their pre- pandemic levels. “This was due to a decrease in the size of the ticket to Rs 4,400, while the number of card transactions moderated too much to three v / s 3.3 in October 21 (3.1 in March 21)” , indicates the report.

Returning from a new issue embargo in August, HDFC Bank became the largest new card issuer in November, issuing more than three lakhs of new cards during the month.

The credit draw showed signs of recovery with the start of the festival season in October. According to the latest set of figures released by the RBI, non-food credit increased 7.51% year-on-year in the fortnight ended Dec. 3, remaining strong a month after Diwali.

In recent months, credit card issuance has increased. In its December 2021 Financial Stability Report (FSR), released on Wednesday, the RBI said aggregate demand for consumer credit, as reflected in survey volumes, had recovered after a decline due to the second wave. “The recovery is driven by demand for the personal loan and credit card segments, while demand for other product categories is showing signs of stabilizing,” the FSR said.

However, banks have become more cautious about issuing credit cards amid the two waves of the pandemic. As a result, outstanding credit card receivables grew more slowly.

According to the latest RBI report on the trend and progress of India’s banking sector, in the first six months of FY22, receivables grew only 2.2% year-on-year, compared with 4.9%. % for the whole year FY21 and 18.6% in FY20.