Ever since the introduction of E-Commerce, the economy has seen quite a bit positive changes. There is a paramount increase in the online transactions, and more importantly, usage of credit cards has become a common phenomenon among the major population in India. As a result, the banking system keeps on adding 5-6 million credit card customers every year.
While the growth of Credit Card is on the rise, home loans have taken a hit due to various factors. This article gives you the details on the credit card growth and the decline of home loans.
Why Credit Card Usage Is High?
With more people shopping online, digital payments using debit and credit cards have become popular. Credit Card is the most convenient way as it allows you to pay later for your purchase. Moreover, with offers like cashback, reward points and miles, people prefer to get a credit card to decrease the expenses.
According to the RBI report, the number of credit cards being used until recently was 29.8 million and it is expected to accumulate much more credit card users. While there is increase on the number of users, the debt availed on the credit card too keep on increasing by 25 percentage.
Credit Card Growth Beats Home Loan
Home loans which were the biggest driver of credit growth have dropped due to the merger of SBI with associated banks. This has made the banks to slow down the disbursements as they focus on rationalising its branch network. Another reason for slow disbursement could be that several micro-finance companies have been converted to small finance banks.
Housing loan which was growing at 17% has slowed down to 11.4 percentage. On the contrary, credit card has become the biggest moving product that propels the credit growth year-on-year by 28 percentage.
As the banks see a growth in the credit, it seems Indians are comfortable living off credit. Keeping in mind the growth rate of credit card usage, banks too provide a lot of freebies and offers to attract more customers.
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