New Credit Card Additions Fall Steeply in June

Mumbai: The net addition of credit cards by lenders in June 2024 was at the slowest pace since October 2022. Players such as HDFC Bank and Kotak Mahindra Bank continued to lose market share in cards in force (CIF), while Axis Bank lost volumes and value. According to experts, higher risk weights and a ban on a few banks on issuing co-branded credit cards have contributed to the decline.

The industry added 5.1 lakh credit cards in June versus 7.6 lakh in May’24 and 9.3 lakh in June 2023, a decline of 33 per cent month on month and 45 per cent year on year. This is the lowest figure since October 2022. With net additions lower than in May, the industry saw cards in force increase 17 per cent year on year in June. On the same lines, growth in credit card spend value at Rs 1.58 lakh crore fell from 26.2 per cent year on year in June 2023 to 15.7 per cent in June 2024. The June spend volume grew 36.2 per cent year on year to Rs 357 lakh crore.

“Composition of value between PoS and e-commerce changed 200 basis points with the latter getting a higher share (63 per cent versus 61 per cent in May) and the former at 37 per cent versus 39 per cent the month prior. PoS and e-commerce volumes continued to move in favour of the former, now around 53 per cent, while the latter’s share declined to around 47 per cent,” said a report from brokerage Anand Rathi.

In November 2023, the RBI said that credit card receivables of banks will attract a risk weight of 150 per cent against 125 per cent, and for non-banking financial companies (NBFCs), it would be 125 per cent, up from 100 per cent. The RBI banned Kotak Bank from onboarding new customers via any and all online channels (in April) resulting in the bank losing 43 basis points market share in cards in force month on month and 57 bps year on year. The RBI also restricted Federal Bank, and South Indian Bank from issuing new co-branded credit cards.

When it came to cards in force market share, SBI Cards and Payments lost another 102 basis points year on year and gained 3 basis points month on month dropping to 18.5 per cent, the lowest since August 2022).