Credit card loans continue to slow

Mumbai: Lending through credit cards has come under sharper scrutiny as banks turn cautious amid signs of stress in the segment along with two-wheelers, commercial vehicles and micro loans against property. However, overall retail asset quality remains stable, TransUnion Cibil’s credit data for the Sept quarter showed.“In recent quarters, credit card originations declined while delinquencies rose due to portfolio quality pressures and base effects,” said Bhavesh Jain, MD & CEO of TransUnion Cibil. “In the latest quarter, despite continued degrowth in new cards, portfolio quality has improved following corrective actions.”New credit card originations fell about 15% year on year in the Sept quarter, making cards the only major retail product to remain in contraction even as demand and supply picked up across most other segments. Lenders’ caution reflects their experience over the past year, when rapid growth in unsecured lending was followed by rising defaults. The stress in smaller-ticket and unsecured segments has reinforced a broader shift towards “premiumisation”, with lenders focusing on prime, credit-tested borrowers and higher ticket sizes.