Outstanding credit cards have reduced by 23 lakh to 7.8 crore in August, largely owing to a sharp decline in HDFC Bank and Axis Bank cards as they adhered to the Reserve Bank of India norms for deactivating inactive cards, effective from Jul 1.

HDFC Bank saw a decline of 8 per cent in outstanding cards to 1.6 crore cards in August, whereas Axis Bank saw a decline of 10 per cent to 89 lakh cards.

RBI norms

“This is largely on account of implementation of the new RBI norms requiring credit card companies to deactivate cards that are inactive for 365 days. This should impact other players like SBI Card, ICICI Bank as well” Macquarie Research said in a note.

On the other hand, SBI Card added 3 lakh cards in August, which is higher than the 2.8-2.9 lakh cards needed for them to add to maintain market share.

“We believe the new ‘Cashback SBI Card’, released in August-end, could aid their market share further going into the festive season,” the note said, adding that SBI Card has already said that 90-95 per cent of its cards are active and thus, the impact of the norms will be limited.

Card spends

The volume of credit card transactions continued to remain strong, rising 4.2 per cent to 25 crore credit card transactions as at the end of August.

However, credit card spends for the industry fell 3 per cent to ₹1.1 lakh crore during the month, even as they were 45 per cent higher on-year. Spends has touched a record high of ₹1.2 lakh crore in July, a growth of 6.5 per cent from June.

Axis Bank, HDFC Bank and SBI Card saw an increase of 50-70 bps in their spends market share, whereas ICICI Bank lost market share by 230 bps.

“The sharp movements here are also impacted by corporate spends and hence it is difficult to conclude on retail market shares on the basis of spends alone,” the research firm said.

Card spends are expected to remain elevated in the coming months as a slew of offers and discounts are being announced by most issuers to encourage spending during the festival season.

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