Indians Go For Credit Cards Rather Than Debit Cards

Credit CardsThe credit card market is emerging at a rapid pace in India and Indian banks have been promoting them heavily. The RBI’s latest monthly report reveals that approximately, one-fifth of the total retail electronic payments is being conceded through credit cards, whereas, debit cards’ share is just 4%.

The Metro cities like Delhi and Mumbai are highly penetrated by credit cards. The credit card issuers found excellent business prospects in Kolkata, Bangalore, and Hyderabad as well because of their IT/ITeS groups. With increase in the number of commercial activities and the growing swanky malls in smaller cities give bankers another target for their credit card market.

RBI’s latest monetary policy review shows concerns about credit card’s continued high growth and it has increased provisioning to 2% for outstanding credit card receivables to slam the brakes.

As per records, credit card payments totaled Rs.25,400 crore during April-December 2006, whereas during the corresponding period in 2005-06, it was approx. Rs.22,000 crore. Central Bank’s monthly report shows Rs.33,886 crore of total credit card payment during the fiscal year 2005-06 as compared to Rs.25,686 crore in 2004-05 and Rs.17,663 crore in 2003-04.

During the first eight months of 2006-07, debit card payments was placed at Rs.5,177 crore, in contrast to Rs.5,897 crore during 2005-06, Rs.5,361 crore in 2004-05 and Rs.4,872 crore in 2003-04. In general, the electronic payment system is gaining currency at a retail level.

Rs.1,45,057 crore has been paid using electronic means during April-November 2006.

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