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Covid Wanes, Credit Card Spending Rises

By Manojit Saha
September 08, 2021 13:31 IST
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'Spends are likely to increase from the current levels because recovery is yet to fully be over.'
Manojit Saha reports.

Illustration: Uttam Ghosh/

Indians are spending on their credit cards like before the coronavirus pandemic hit the country late 2020 as restrictions are eased on public movement and businesses, reveals data released by the Reserve Bank of India.

Credit card spending dipped to Rs 52,131 crore (Rs 521.31 billion) in May this year.

It increased to Rs 62,746 crore (Rs 627,46 billion) in June -- a number higher than in February, but marginally below levels seen in January.

Spending in June 2021 was slightly more than February 2020 -- a time before the pandemic -- but lower than the January 2020 number of Rs 67,000 crore (Rs 670 billion).

March recorded the highest credit card spending, of more than Rs 72,000 crore (Rs 720 billion), in 2021.


All major credit card companies saw a sharp improvement in spending in June 2021 after a decline in April and May, a period when India was battling a second wave of coronavirus infections.

The January-March and April-June quarters of 2021 saw growth compared to the same period last year.

Spending in April-June of 2021 was however lower compared to the preceding quarter.

'Total CC [credit card] spends rose 20% MoM in Jun'21 after declining 18%/12% MoM in Apr'21/May'21. The improvement in spends can be attributed to lower lockdown restrictions owing to falling covid cases,' ICICI Securities said in a report.

'Jun'21 CC spends came in at Rs 62700 crore, largely in line with average spend of Rs 650bn seen during H2FY21,' the ICICI Securities report added.

Growth in credit card spending slowed down in the previous financial year, largely due to the lockdowns to contain the coronavirus and regulatory measures.

HDFC Bank, the largest credit-card issuer in the country, was banned by the Reserve Bank of India from issuing new cards in December after frequent outages in the lender's mobile and net banking platforms.

HDFC Bank's total card base fell from 15.38 million in December to 14.82 million in June after the ban, which the central bank partially lifted earlier this month.

As on June 30, the total credit card base of the entire system was 62.8 million.

Market share, in terms of credit card spending, shows that domestic players are leading and foreign banks are losing out.

In terms of spending market share, foreign-owned Citibank, American Express and HSBC witnessed sequential dip.

India's SBI Card saw a 30bps increase to 19.5 per cent in June 2021, said the ICICI Securities note.

Among other Indian lenders, HDFC Bank and RBL Bank's credit card spends in terms of market share stood at 27.9 per cent and 4.8 per cent, down around 43bps and 36bps month-on-month basis, respectively. Axis Bank remained stable at 8.3%.

As festivals near and more states ease restrictions for the coronavirus, spending is expected to improve significantly.

"Spends are likely to increase from the current levels because recovery is yet to fully be over. Travel related spends are improving, hotels are seeing higher occupancy rates, there is some pick up expected in the restaurant side also. As of now mostly delivery is happening, dine out is yet to pick up. Malls, multiplexes also will be opening," says Nitin Aggarwal, an analyst with Motilal Oswal Securities.

"Credit card spends dipped due to the lockdowns. The numbers for June suggest spending are inching up. Definitely there is going to be a sustained increase in credit card spends partially because if you see the pattern most of the large purchases are made on cards," says Sunil Rongala, who works with Worldline, a transaction facilitator in the digital payments space.

"Given that there are a lot of incentives to spend on credit cards, you are going to see spending increase," Rongala adds.

According to ICICI Securities, the second quarter of FY22 could see 35 per cent higher spends than the first quarter of FY22 and 59% higher than Q2FY21.

"The entire chain of recovery is likely to happen in the coming months which will drive further pick up in spending," says Aggarwal.

"At the same time new card acquisition rate will also improve, particularly for these card companies like SBI Card, who are aggressive in going out to source cards. This activity will not result in a higher acquisition," Aggarwal adds.

HDFC Bank, the the largest private sector lender of the country, aims to get back to its pre-ban run rate of issuing 300,000 cards per month in the next 2-3 months, which would be increased to 500,000 credit cards every month beginning February 2022.

"The 5-lakh number is huge. This is more than the monthly average of new card acquisition of the last financial year, points out Aggarwal.

On average, FY21 saw little more than 350,000 cards added every month.

Value of transactions by credit cards at PoS terminals
(Rupees lakh) 2021
Jan Feb March April May June  
SBI Card 1214309 1056119 1323870 1102973 1001562 1221507
Axis Bank 509072 524671 661083 520277 434493 519105
HDFC Bank 2008124 1774602 2106608 1684588 1479286 1753372
ICICI Bank 1021497 1005567 1195526 1046643 951746 1188705
Citi 338382 306905 398780 305196 258600 302718
Total 6481851 6010346 7238227 5915036 5213064 6274596
Jan Feb March April May June  
SBI Card 1222943 1066671 953302 408935 632498 867094
Axis Bank 689650 637566 496497 186722 255494 360289
HDFC Bank 1946179 1797807 1506639 622568 1002951 1340969
ICICI Bank 893414 911235 669235 231783 425550 587673
Citi 427757 382244 313567 143305 212216 298400
Total 6700225 6252309 5069650 2085817 3227086 4281813
Source: RBI

Feature Presentation: Rajesh Alva/

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