Credit card spending may surge during the festival season, but rising delinquencies and regulatory scrutiny loom ominously over growth prospects.

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Credit card spending may surge during the festival season, but rising delinquencies and regulatory scrutiny loom ominously over growth prospects.

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Credit card spending is anticipated to increase during the upcoming festival season, driven by discretionary purchases and promotional offers. However, growth may be tempered due to stricter regulations on unsecured lending and rising delinquencies in credit card payments. In August 2024, credit card transactions rose by 13.51% year-on-year, but there was a slight decline compared to July, with major banks like HDFC Bank and ICICI Bank reporting reduced spending. Experts indicate a cautious outlook, emphasizing that while retail spending is still strong, banks are tightening credit limits amid rising default rates. The total number of outstanding credit cards has increased, reflecting growing consumer interest, but concerns over delinquencies persist in the credit landscape.



As the festival season approaches, credit card spending is anticipated to rise due to increased discretionary purchases. However, experts warn that growth may be limited by closer regulatory scrutiny on unsecured loans and ongoing issues with rising delinquencies in the credit card sector.

During the festival period, which spans from September to December, credit card usage typically surges as banks offer enticing discounts and cashback deals on platforms like e-commerce. Nitin Aggarwal from Motilal Oswal Institutional Equities noted that tighter credit standards and reduced spending limits for customers deemed risky by banks could impact overall spending. The growth forecast for credit card spending in the financial year 2025 appears modest, particularly due to a notable drop in corporate spending from major players.

Recent figures from the Reserve Bank of India (RBI) reveal that while credit card spending in August 2024 rose by 13.51% compared to the previous year, it showed a month-on-month decrease of 2.3%. This drop was echoed among major banks, including HDFC Bank, SBI Cards, ICICI Bank, and Axis Bank.

Saurabh Bhalerao from CareEdge Ratings expressed that although there might be a rise in spending in the coming months, concerns over increasing delinquency rates and lower credit limits could hinder growth. The latest report from TransUnion CIBIL highlighted a slight increase in balance-level delinquencies for credit cards, indicating financial strain among consumers.

The total number of outstanding credit cards also continued to grow, reaching over 105 million in August. With concerns surrounding delinquencies and cautious lending practices, the festival season will be critical in determining the direction of credit card spending going forward.

For ongoing updates on credit card trends and financial news, follow our blog.

What is the main concern about regulatory scrutiny on credit cards during the festive season?
The main concern is that new rules may make it harder for people to use credit cards, which could reduce spending during the holiday season.

How could stricter rules affect consumers?
Stricter rules could mean lower credit limits or higher interest rates, making it more difficult for people to shop and enjoy the festive season.

Will retailers be impacted by these changes?
Yes, if people spend less due to credit card restrictions, retailers may see lower sales during the busy holiday shopping period.

Are there any benefits to the new regulatory measures?
Yes, the measures could help protect consumers from debt and encourage responsible spending, leading to better financial habits.

What should consumers do in light of these changes?
Consumers should plan their budgets carefully, consider using alternatives to credit cards, and stay informed about any new policies that could affect their spending.

Credit card spending may surge during the festival season, but rising delinquencies and regulatory scrutiny loom ominously over growth prospects.

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