Credit Card Spending Sees 25 Percent Yearly Surge in September Driven by Festival Demand

Credit Card Spending Sees 25 Percent Yearly Surge in September Driven by Festival Demand

Credit card spending in India experienced a significant surge of 25 percent year-on-year in September marking the highest growth in six months. According to data from the Reserve Bank of India (RBI) spending reached ₹1.76 trillion compared to ₹1.42 trillion during the same month last year. This increase comes despite many banks reporting higher slippages during the July to September quarter of 2024-25.

The September spending figure also reflects a notable rise from ₹1.68 trillion spent in August 2024. Analysts attribute this robust growth to the demand generated by the festive season as well as a favorable base effect from the previous year. Saurabh Bhalerao head of BFSI research at CareEdge Ratings stated that promotional schemes such as equated monthly installments during the festival period have contributed to this trend. He also indicated that spending is expected to rise further in October due to ongoing festival-related promotional activities.

Nitin Aggarwal a research analyst at Motilal Oswal Research highlighted that the early start of the festival season boosted spending in the latter half of September. He predicts that industry spending will continue to grow in the high teens for the financial year while noting that upcoming trends will be essential for assessing the overall trajectory.

Despite the positive spending growth RBI Governor Shaktikanta Das acknowledged that the festival season presents mixed signals for India's economic growth. However he emphasized that the positives outweigh the negatives indicating that the economy is performing well. High-frequency indicators continue to show robust growth despite some private banks reporting increased stress in credit card and microfinance segments during the July to September period.

Arjun Chowdhury group executive at Axis Bank mentioned during a post-earnings call that certain segments of credit cards are showing early signs of stress and indebtedness. As a precautionary measure the bank has limited the issuance of new cards and is managing its existing portfolio more cautiously.

HDFC Bank the largest issuer of credit cards in India reported a 35 percent increase in spending totaling ₹52,226.59 crore up from ₹38,661.8 crore in September 2023. Other banks also saw positive growth with SBI Cards and Payment Services transactions rising by 11 percent to ₹27,714.7 crore while ICICI Bank recorded a 24 percent increase to ₹31,457 crore and Axis Bank saw a 15.1 percent rise to ₹18,721.9 crore.

While spending increased the growth rate of outstanding credit cards has started to slow. The number of credit cards in circulation rose by 14 percent year-on-year to 106.11 million compared to 93 million in September 2023. HDFC Bank led the market with 22.4 million cards followed by SBI Card with 19.5 million ICICI Bank with 17.56 million and Axis Bank with 14.79 million. The growth in the number of cards has gradually slowed from nearly 20 percent year-on-year in January 2024 to 14 percent in September 2024.