Are consumers’ spending habits changing the financial landscape? The latest data from the Reserve Bank of India (RBI) shows that credit card expenditures reached an astounding Rs 1.37 trillion in March 2023. This is the 13th consecutive month that credit card spending has surpassed the Rs 1-trillion mark, demonstrating increased consumer spending since the Covid pandemic’s decline. The total credit card spending for 2022-23 was Rs 14 trillion, up by an impressive 47.27% from the previous fiscal year.
In March alone, the banking industry added approximately 1.93 million credit cards, raising the outstanding credit card base to 85.3 million cards. This is a notable increase from the 1.2-1.5 million cards added monthly during the last financial year. In FY23, around 11.67 million cards were added, a slight increase from 11.15 million additions in FY22.
E-commerce spending accounted for nearly 63% of the credit card expenditures, with the remaining balance allocated to point of sale (PoS) terminals. March’s spending surged by 28% year-on-year and 15% month-on-month, surpassing the previous record of Rs 1.29 trillion set in October 2022 during the festival season.
A Competitive Landscape in the Banking Industry
Axis Bank’s credit card spending leaped by 54% compared to February, followed by ICICI Bank with over 20% growth. HDFC Bank experienced a 14% increase, while SBI Card saw an 11% upswing. Axis Bank led the net addition in credit cards with 2.34 million, as Citibank’s credit card portfolio was integrated into the bank. The outstanding card base for Axis Bank expanded to 12.1 million as of March 31.
HDFC Bank holds the largest market share in both cards in force (CIF) and spending. As of March 2023, HDFC Bank’s spending market share was 27.41%, with a CIF market share of 20.55%. SBI Card followed with 17.93% and 19.65% market shares in spending and CIF, respectively. ICICI Bank came in third with 17.45% and 16.94% market shares in spending and CIF, respectively. Axis Bank held an 11.97% market share in spending and a 14.21% market share in CIF.
The record-breaking credit card expenditures in March 2023 indicate a change in consumer spending habits and a boost in consumer confidence. As the banking industry continues to evolve, we can expect further growth and competition in the credit card market, with major players vying for market dominance.