'Growing Stress': Indians' Credit Card Spending Reached Record High In August
New Delhi: Credit card spending by Indians rose to an all-time high of Rs 1,48,000 crore in August, suggesting that indebted households have ramped up their borrowing in anticipation of the festive season that began this month and sparking concerns about potential defaults.
According to Bloomberg, the surge in spending "is in line with rising indebtedness and falling savings among Indians and may point to growing stress as incomes stagnate". Latest data from the RBI said that the total amount transacted via credit cards surged to Rs 1,48,000 crore in August, up from July's figure of Rs 1,45,000 crore.
Rupa Rege Nitsure of L&T Finance told Bloomberg that credit card expenditures indicate that people are resorting to borrowing for their spending needs, adding " “As loans on credit cards are unsecured, there is a risk of high defaults,” particularly if economic growth slows later in the year."
Additionally, the upward trend in spending reflects the aggressive retail strategies employed by lenders in India, which is an "under-banked market", Bloomberg said. Since the peak of the COVID-19 pandemic, banks have expanded their loan portfolios by primarily catering to individuals, while demand for credit from businesses has lagged, the report says.
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