Credit card usage in India grows as consumers finance consumption needs

New Delhi: Credit card usage in India grew at 34 per cent in the September quarter of 2024, compared to 26 per cent in the same period in 2023, as consumers increased spending on their existing credit cards to finance their consumption needs, according to a report on Monday.

India’s retail credit growth moderated a bit in the quarter ending September 2024 due to a general cooling in the rate of credit demand growth and a decrease in credit supply across most loan products, according to the TransUnion CIBIL Credit Market Indicator (CMI) report.

“The marked increase in credit card spending indicates its expanding acceptance among consumers, not only for transactions but also as a tool to access credit,” said Bhavesh Jain, MD and CEO of TransUnion CIBIL.

This may be an opportunity for lenders to identify consumers who require additional credit for their consumption and aspirational goals, and service them with customised solutions that are better suited and affordable for them.

These customised credit offers should focus on helping the consumer fulfill their needs effectively while also supporting them in building a stronger credit profile, Jain added.

By using more comprehensive data insights to understand the changing dynamics of consumer spending and credit usage, lenders can devise dynamic strategies better suited to evolving market conditions while enhancing customer loyalty.

Achieving the dual objectives of sustained credit growth while simultaneously maintaining asset quality requires issued loans to be repaid on time to help minimise default risks and preserve financial stability.

“Evolving market conditions mean lenders need to take a targeted approach to retail credit growth. Intensive portfolio monitoring, facilitated by innovative analytic techniques, will enable lenders to prudently advance credit to qualifying consumers across India, acting as a catalyst for economic activity and development,” Jain suggested.

According to the report, while personal loan origination volumes recorded a double-digit YoY growth, the growth was at a slower pace (up 11 per cent quarter ending September 2024) compared to the same period the previous year (up 32 per cent).

Loans against property and two-wheeler loans also saw growth in originations, the report added.

—IANS