Despite concerns over a slowing economy, Indians are lavishly spending through credit cards. Credit card spending by Indians rose 28% to Rs 96,000 crore in 2011-12 from Rs 75,000 crore in the previous fiscal year, the highest in four years. Matching the trend, spending through debit cards (or ATM cards) also grew by 38% to Rs 53,000 crore in the last fiscal, according to the Reserve Bank of India (RBI) data.
“The continuous rise in point of sale (PoS) terminals in the country combined with the increased use of online payment is encouraging consumers to go for plastic money,” said Shyamal Saxena, general manager, retail banking products, consumer banking, India and South Asia, Standard Chartered Bank.
“Increased credit card spending also reflects high level of confidence among consumers."
Banks are also encouraging customers to use credit cards by offering rewards points, which fetch discounts for customers on the next shopping, on every purchase through cards.
However, banks have become more cautious in issuing credit cards to customers. The number of credit cards issued declined to 17.7 million in 2011-12 from 18 million in 2010-11. "Banks are now selective in issuing cards to new customers," said Saxena.
ATM cards have witnessed a healthy increase to 278 million in 2011-12 from 228 million in 2010-11.