By Anup Roy
Credit card spending by Indians surged to a record high, raising concerns of potential defaults as indebted households stepped up their borrowing spree ahead of the festive season that kicked off this month.
The card spends “indicates people are borrowing to spend,” said Rupa Rege Nitsure, Group Chief Economist of L&T Finance. “As loans on credit cards are unsecured, there is a risk of high defaults,” particularly if economic growth slows later in the year.
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The rising spends also points to an aggressive retail push by lenders in the under-banked market with a 1.4 billion population. Post pandemic, banks have expanded their balance sheet mainly by funding individuals, while credit demand from businesses has somewhat lagged.
Record-low rates offered to meet pent-up demand has seen banks’ retail loan portfolio double between 2019 and now, raising concerns among policymakers.
First Published: Sep 28 2023 | 8:12 AM IST