India Sees Surge in Credit Card Adoption as Consumers Meet Spending Needs
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Synopsis
In the September quarter of 2024, credit card usage in India increased by 34% compared to 26% in the same quarter of 2023. This growth is driven by consumers using credit cards more for their consumption needs, according to a recent report.
Key Takeaways
- Credit card use surged by 34% in Q3 2024.
- Retail credit growth showed signs of moderation.
- Increased spending reflects growing consumer acceptance.
- Lenders can leverage tailored solutions for consumers.
- Timely loan repayments are essential for stability.
New Delhi, Jan 27 (NationPress) The utilization of credit cards in India surged by 34 percent during the September quarter of 2024, up from 26 percent in the same quarter of 2023. This increase is attributed to consumers' heightened expenditure on their current credit cards to meet their consumption needs, according to a report released on Monday.
The retail credit growth in India slightly dampened in the quarter ending September 2024, due to a general decline in the demand for credit and a reduction in credit supply across various loan categories, as highlighted in the TransUnion CIBIL Credit Market Indicator (CMI) report.
“The significant rise in credit card expenditures reflects its growing acceptance among consumers, not just for transactions but also as a means to obtain credit,” stated Bhavesh Jain, MD and CEO of TransUnion CIBIL.
This trend presents an opportunity for lenders to identify consumers who may need additional credit for consumption and aspirational objectives, allowing them to offer tailored solutions that are affordable and well-suited to these needs.
These personalized credit offerings should aim to assist consumers in effectively meeting their needs while also aiding them in establishing a robust credit profile, Jain emphasized.
By leveraging more comprehensive data insights to grasp the shifting dynamics of consumer spending and credit utilization, lenders can formulate dynamic strategies that align with changing market conditions, thereby boosting customer loyalty.
Successfully achieving the dual goals of sustained credit growth and maintaining high asset quality necessitates that loans are repaid punctually, minimizing default risks and ensuring financial stability.
The report noted that while personal loan origination volumes experienced double-digit year-over-year growth, the pace was slower (increased by 11 percent in the quarter ending September 2024) compared to the same timeframe last year (up 32 percent).
Additionally, loans against property and two-wheeler loans also witnessed growth in originations, as per the report.
