The sharp month-on-month improvement in cards in net card additions to 3,43,000 cards in July as against 1,09,000 cards in June, is good. But analysts at IIFL Securities feel this may have come from banks
relaxing their risk threshold on credit cards.
Average card spends increased from Rs 7,500 in June to Rs 7,900 in July. Here again, Suresh Ganapathy of Macquarie Capital says with e-commerce companies
once again accepting cash on delivery how this number fluctuates in the coming months will be key. Also, net card additions are still way below March’s 5,87,000 level and average spends also trails January’s Rs 12,000 significantly.
Analysts at ICICI Securities also point out that banks
may be also nudging customers to use more debit card usage than credit cards, as a tool to keep credit risk
under check. Since 2016, the non-performing assets (NPA) in the cards business was maintained 1 – 2 per cent. In the context of loan restructuring and waiver, slowing or stagnating card additions and spends could sway the NPA number to banks’ disadvantage. In short, the fast growth patch may have an unprecedented speed bump, repercussion of which will be known in the coming weeks.