Banks giving out bank cards have some excellent news. The overall skepticism about their enterprise seems to be fading. Indian bank card holders owed their banks ₹2 trillion in dues by April, a milestone. This got here after a yr of document progress—with the high-interest charges that missed bank card funds are identified for, banks have a lot to be enthusiastic about. Bank card transactions clocked ₹14.3 trillion in 2022-23, and have grown greater than 20% in all years besides 2020-21, once they declined. The variety of playing cards is up greater than fourfold since a decade in the past. But, an enormous quantity of dues on an unsecured lending instrument additionally creates a burden for banks. Mint seems into the info.
Rising up the ranks
With a 4.9% share, bank card dues kind the third-biggest phase inside private loans. The share is at its highest in 14 years. Till 2017-18, the phase was the fifth largest however has risen the ranks with rising client confidence and enticing loyalty programmes. Bank card dues have risen at among the many quickest charges amongst main mortgage segments in the previous few years. Whereas UPI has turn into the king, bank cards have overtaken debit playing cards within the realm of card-based funds as many debit card customers now favor UPI.
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India has over 87.7 million bank cards throughout 34 scheduled industrial banks as of Could 2023. The common transaction quantity per bank card throughout all banks in Could was ₹16,071. Among the many 13 banks with over one million bank cards, IndusInd Financial institution topped the checklist with common transactions price ₹30,754 in Could. Solely three of those 13 banks had a mean transaction of ₹20,000 or extra in Could. State Financial institution of India had the best common per-card transaction amongst public sector banks.
Development potential…and a observe of warning
The transfer to hyperlink bank cards with UPI may assist increasingly individuals undertake plastic cash within the coming years. Nonetheless, a excessive worth of excellent dues on bank cards additionally requires warning because it means a rise in unsecured loans within the banking system. In keeping with a current Mint report, the central financial institution is more likely to elevate the chance weights of unsecured loans, together with bank card receivables, whereas measuring banks’ asset high quality in a bid to curb reckless lending.
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Up to date: 10 Jul 2023, 12:39 AM IST
Supply: Live Mint