After a year that saw a slump, Indians are now bouncing back in plastic spending power according to the Reserve Bank of India (RBI). Credit card spending in India rose by 22% to Rs 75,516 crore in 2010-11 from Rs 61,824 crore in 2009-10, while the number of credit cards in the country remained flat at Rs 1.8 crore.
Due to the economic slowdown, spending through credit cards declined by 4% to Rs 61,824 crore in 2009-10 while the number of credit cardholders fell sharply by 26% to 1.8 crore in 2009-10 from 2.5 crore in 2008-09 (see table).
"The buoyancy in the credit card spending reflects that the consumer's confidence is back, which was missing during the economic slowdown," said Shyamal Saxena, general manager, retail banking products, consumer banking, India and South Asia.
Banks, which had become cautious in issuing new credit cards, have again put their focus on new customer acquisition.
"After the slowdown, banks narrowed their focus to existing customers only and avoided issuance of new cards, as a precautionary approach," said KVS Manian, group head, consumer banking, Kotak Mahindra Bank.
"With economic situation better now, banks have again started issuing new cards."
Debit cards (or ATM cards) transactions have also witnessed significant growth. Spending through debit cards increased by 47% to R38,692 in 2010-11, while the number of cardholders rose to 2.3 crore in 2010-11 from 1.8 crore in the previous year.