Card outstandings have shot up by 77.74 per cent in the past two years, from Rs 33,700 crore in September 2015. The rise in card usage was more visible in the past 12 months as the banking system saw a shortage of cash during the November-January period of fiscal 2016-17, after demonetisation.
According to the RBI, the number of credit cards also rose sharply from 26.39 million in August 2016 to 32.65 million in August 2017. Banks normally charge an interest of 3.49 per cent per month (41.88 per cent per annum) on card outstandings.
This means banks should earn an interest of close to Rs 2,090 crore on the outstanding amount of Rs 59,900 crore. Besides this, banks also charge 18 per cent GST on the amount. Interest rates are high on card outstandings as incidents of defaults are very high in the segment, said a bank official.