Credit Card Payment Failures Increased 110 Bps In June 2024 On Y-O-Y Basis, Says CRIF Report

Credit card repayment delinquencies are increasing due to rising customer stress and indebtedness, according to a Centre For Research In International Finance (CRIF) report. 

Delinquencies in the 91-180 days past due (DPD) bracket have risen by 110 basis points (bps) to 7.6 per cent as of June 2024, compared to 6.5 per cent in June 2023. This means that customers are defaulting or delaying repayment of their credit card dues even after 180 days, the report said. Additionally, delays in the 181-360 days bucket have increased from 0.7 per cent to 0.9 per cent, while those above 360 days default have risen from 1.3 per cent to 1.7 per cent, the report added.  

When a customer delays repayment beyond the billing cycle, the bank charges a higher rate of interest, typically around 42-46 per cent on the outstanding dues, causing the borrower’s credit score to plummet. 

The average balance per card also rose to Rs 32,233 by June 2024 from Rs 28,919 in June 2023, CRIF said in its report. 

According to the Reserve Bank of India (RBI), credit card payment failures have increased to Rs 281,392 crore as of October 2024, up from Rs 249,635 crore in 2022. 

Incidentally, the RBI has increased the risk weight on banks’ exposure to consumer credit, credit card receivables, and non-banking finance companies (NBFCs) to address risk build-up. The RBI’s financial stability report (FSR) of June 2024 said that the increase in risk weights on certain consumer credit segments impacted the growth rate of overall consumer credit, particularly personal loans and credit cards. Incentives such as rewards on higher spending, loan offers, and lounge benefits have attracted customers to the credit card segment.  

Credit Card Transactions Increase 

The value of credit card transactions tripled in the last three years to Rs 18.31 lakh crore during the year ended March 2024 from Rs 6.30 lakh crore in March 2021 with the economy recovering from the Covid-19 pandemic and consumer confidence increasing steadily over the last several quarters. 

According to data from the RBI, the value of credit card transactions also rose from Rs 6.30 lakh crore to Rs 9.71 lakh crore during the year ended March 2022, and Rs 14.32 lakh crore as of March 2023.  

The monthly spend by card users is now above Rs 1.50 lakh crore and was at Rs 176,202 crore in September 2024. In March 2021, it was Rs 72,319 crore.  

The number of credit cards issued by banks also rose to 106.1 million as of September 2024 from 93 million in September 2023. In March 2022 and March 2021, the figures were 73.6 million and 62 million, respectively.