Credit card customers turn more responsible
After a year of lull, credit card companies have reasons to cheer as 2010-11 will prove to be a year of a bigger and cleaner balance sheet for them. The quality of credit card customers in India has improved, with lower delinquencies and cleaner credit records over the past year, according to banks and credit card issuers.
“The past couple of years have seen a big cleanup of the credit card books in the industry with the remaining customers being typically higher credit quality and with higher credit limits,” a senior HSBC official told Financial Chronicle.
The total value of credit card transactions in India, which peaked at Rs 65,355 crore in 2008-09, saw a 5% drop to Rs 61,824 crore in 2009-10. However for the period up to January 2011 of the current financial year, credit card spends by customers in India has reached Rs 62,335 crore, according to figures from the Reserve bank of India (RBI).
“Industry default levels have come down. Customers are also more conscious about keeping their credit records with the bureau clean. Banks have also mostly cleaned up their portfolios and closed credit bad accounts. This has overall contributed to an improvement in the credit environment,” Shyamal Saxena, general manager – consumer banking, Standard Chartered Bank said.
Compared to the modest growth in credit card usage, transactions through other modes like net banking and debit cards have seen a quantum growth this financial year.
Debit card transactions levels have been at Rs 32,029 crore in the ten-month period up to January 2011 against Rs 26,418 crore in 2009-10.
Does this signify a more responsible usage of credit cards by customers? Industry members uniformly believe so. “Balance outstanding on credit cards is declining in spite of higher spending on cards. This suggests that more customers are using their cards as a transaction instrument rather than for short-term borrowing,” pointed out the HSBC official.
Processing your request, Please wait....
