Credit card spends in June-July top even Diwali 2021

Mumbai: Consumption demand is back with a bang, with banks registering record-high spends on credit cards in June and July, even surpassing the Diwali season figures of last year.

Banks ET spoke to expect the momentum to continue, and spending on credit cards to top all previous records during the festive months, the peak consumption season in India.

Several of them, including HDFC Bank, Axis Bank and Kotak Mahindra Bank, which have been aggressive in signing up credit card customers in the past months, have lined up new offers to encourage customers to use their cards for festive purchases.

"The June numbers on credit card spends were very strong, which signifies increased consumer confidence, and those trends are continuing in July and early part of August," said Sumit Bali, head of retail banking at Axis Bank.

"We expect spends to peak in October. The spends across categories were very good, whether it's travel, entertainment or discretionary."

HDFC Bank, the leader in the credit card market with a more than 22% share, is gearing up to launch the fourth edition of 'Festive Treat', a programme to promote spending on its cards during the festive season. It will make 300-plus offers nationally and more than 9,000 regionally under the programme.

"Our Festive Treat plan would encompass all segments of merchant partners to provide great usage offers to customers. This will include tie-ups with large ecommerce partners like Amazon and Flipkart, food delivery partners like Swiggy and Zomato, travel partners like MakeMyTrip and GoIbibo and beauty partners like Myntra and Nykaa," said Parag Rao, group head - payments at HDFC Bank. "There are new products in association with strong partners that will address the shopping, lifestyle and travel segments."

According to RBI data, the country's banks reported a net addition of 1.8 million credit cards in June. That took the total number of credit cards to 78.7 million, up 25.3% from a year earlier.

HDFC Bank topped the list for signing up new customers, with an addition of more than 3,86,000 cards, followed by Kotak Mahindra Bank (2,63,000) and Axis Bank (2,29,000).

Ambuj Chandna, president of consumer assets at Kotak Mahindra Bank, said the issue and use of credit cards had increased as the risk models across the industry stabilised.

A pickup in travel and increased spending on items like apparel also point to a broad-based consumption revival, which is boosting spending on cards, he said, adding: "We are touching life-time highs every month now; so the festive season looks very promising."

A new entrant in the cards space, IDFC Bank, too has lined up lucrative offers in partnership with merchants for the festive season.