119-Credit Cards History and Growth in India

CREDIT CARDS HISTORY AND GROWTH IN
INDIA
Introduction:
Technology induced developments in payment and settlement systems have
been significant in recent years and can be analysed under two major categories.
The first category relates to adapting the existing payment products for use on new
channels brought about by technology. The card schemes with their ubiquitous
acceptance network fit into the first category. The adaptation of card based payments
over the internet has enabled the use of such products across the globe.
Payment and Settlement Systems are a vital part of the economic and
financial infrastructure and contribute to the overall economic performance and
financial stability by facilitating efficient financial intermediation. The Indian financial
system is characterised by existence of a variety of payment systems and products
reflecting continuation of traditional paper based mode of payments along with a
significant growth in a range of diverse electronic modes of payments. The
increasing penetration and emergence of new forms of payment and settlement
systems makes the supervision and oversight of payment systems a critical function
of the Reserve Bank for ensuring the safety of these systems.
Technology and Card Based Payment Systems:

Advances in Information Technology have brought about significant changes
in payment channels available across the globe. In India too, while card based
payments have been in use for quite some time, more recently, internet/mobile
phone based products and the use of these channels for transactions have been
gaining momentum and popularity. Further variations of cards like the pre-paid cards
also have emerged.
Cards:
One of the fastest growing segments is the card segment with 18 million
outstanding credit cards and 228 million debit cards. During the year 2010-11 (AprilMarch) 265 million transactions for a value of `755 billion was transacted using credit
cards. 237 million transactions for a value of `357 billion were transacted using debit
cards at PoS terminals. Maximum usage of debit cards happens at ATMs with 4,235
million transactions for a value of `11,144 billion.
People having debit cards
comprise only 13 per cent and those having credit cards a marginal 2 per cent.
Table 2
Growth of Cards Issued by Scheduled Commercial Banks
Credit Cards
Credit Cards
Debit Cards
Debit Cards
(in Millions)
Growth
(in Millions)
Growth
Year
2006-07
23.12
74.98
2007-08
27.55
19.2%
102.44
36.6%
2008-09
24.70
-10.3%
137.43
34.2%
2009-10
18.33
-25.8%
181.97
32.4%
2010-11
18.04
-1.6%
227.84
25.2%
Source Reserve Bank of India Annual reports
From the table 2 we observe that during the period of study the credit cards
have steadily decresed in numbers but the debit cards have put on impressive
growth rates as far as number of cards issued is concerned. The decline in credit
cards may be attributed to stringent norms followed by banks while issuing and also
the loss of interest by Public Sector Banks in Issuing the credit cards. But the growth
achieved by debit cards indicates the consumers preference towards debit cards
than credit cards.
Chart 1
Share of Credit Cards Issued by Scheduled Commercial Banks
Chart 2
Share of Debit Cards Issued by Scheduled Commercial Banks
The Private and foreign banks are dominating the issue of credit cards. It is observed
from chart 1 that during the period of study Private and Foreign banks have issued
more that 80% of credit cards. From Chart 2 we understand the dominance of public
sector banks towards the issue of debit cards. Throughout the period of study the
public sector banks have grown steadily in issuing the debit cards on the contrary the
private sector banks share has declined during the period of study.
Table 3
Growth of Card - Based Payment Transactions (Credit & Debit)
Year
Volume
Volume
Value
Value
(in Millions)
Growth
(Rupees in Crores)
Growth
2006-07
229.6
49,533
2007-08
316.5
37.8%
70,479
42.3%
2008-09
387.3
22.4%
83,903
19.0%
2009-10
404.4
4.4%
88,242
5.2%
2010-11
502.2
24.2%
1,11,221
26.0%
Table 3 indicates the growth trends of card based transactions where both the
volume and value has recorded positive growth during the period of study. The
percentages of growth with regard to volume and value have more or less been
same for all the years. In the year 2010 11, the value crossed the one lakh crore
mark and the volume crossed 500 million mark which is a proof for the efforts taken
by RBI to improve the percentage of Card based transactions.
Table 4
Growth of Credit Card - Based Payment Transactions
Credit Card
Year
Volume
Volume
Value
Value
(in Millions)
Growth
(Rupees in Crores)
Growth
2006-07
169.5
41,361
2007-08
228.2
34.6%
57,958
40.1%
2008-09
259.6
13.8%
65,356
12.8%
2009-10
234.2
-9.8%
61,824
-5.4%
2010-11
265.1
13.2%
75,516
22.1%
The table 4 portrays the credit card based transactions and the growth it has
achieved during the period of study. The negative rate in the year 2009-2010 was
mainly due to the economic recession but the following year 2010-11 recorded a
double digit positive growth rate is a proof for the robust system existing in the
Indian banking sector for the credit card based payment transactions.
Table 5
Growth of Debit Card - Based Payment Transactions
Debit Card
Volume
Volume
Value
Value
(in Millions)
Growth
(Rupees in Crores)
Growth
Year
2006-07
60.1
8,172
2007-08
88.3
46.9%
12,521
53.2%
2008-09
127.7
44.6%
18,547
48.1%
2009-10
170.2
33.3%
26,418
42.4%
2010-11
237.1
39.3%
35,705
35.2%
The table 5 indicates the consistent positive growth rate recorded in the debit
card based payment transactions. With the emergence of more number of Point of
Sale (POS) outlets across the country, the people have starting moving onto the
plastic money. As the RBI is actively promoting debit card based transactions, in a
short while this mode of payment will become very popular.
Conclusion:
With RBI improving the security measures and providing incentives for the
technology based card based payment system, this infrastructure heavy system is
certain to make the technology based payment transactions smoother, easier and
safer in our country. By effectively addressing the risks, costs and security concerns,
RBI is certainly paving the way for massive awareness about the benefits of this
system. The imbalance between the value and volume of credit card based
transactions and debit card based transactions has to be addressed before the
momentum shifts towards the technology based payment systems.

119-Credit Cards History and Growth in India

Uploaded by

Copyright:

Available Formats

119-Credit Cards History and Growth in India

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

119-Credit Cards History and Growth in India

Uploaded by

Copyright:

Available Formats

CREDIT CARDS HISTORY AND GROWTH IN

Technology and Card Based Payment Systems:

People having debit cards

Source Reserve Bank of India Annual reports

Source Reserve Bank of India Annual reports

Source Reserve Bank of India Annual reports

Source Reserve Bank of India Annual reports

Source Reserve Bank of India Annual reports

Source Reserve Bank of India Annual reports

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.