Mint Primer: Why commercial card spending has been paused
₹20,000 crore per month. According to RBI, credit card spending among Indians rose to ₹1.65 trillion in December 2023 from ₹1.61 trillion in November. Macquarie Research says these cards were issued to drive volumes and never contributed much to profitability as margins were low.
So, in the near term, while overall spending will come down for all players, the profitability impact will be low. It expects volume impact and lower card spending beginning in March 2024 to be reported by all banks and SBI Card. Industry officials say BPSP was a special arrangement brought in by Visa.
RBI assured normal business cards used for travel booking etc will not be affected. Experts say businesses will look at alternative credit lines and ways to settle payments between businesses. Banks could continue issuing more normal business cards, where intermediaries are not involved, to make up for lost spending.
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