Number of active credit cards drops after RBI rule comes into force

Mumbai: After the Reserve Bank of India rule mandating credit card operators to deactivate cards that are inactive for 365 days came into effect, the number of credit cards in force declined to about 78 million in August 2022 – a fall of more than two million in one month.

RBI data showed that total credit cards in July were around 80 million.

The month of August saw a sharp decline in HDFC Bank‘s credit cards in force – the number fell by 1.5 million, or 8%, in a month. For Axis Bank, the count fell by 1 million cards, a 10% drop from July.

The drop in the number of active credit cards has largely been due to the new RBI rule, which came into effect in July.

“The new norms requiring deactivation of 365-day inactive cards distort the market share picture (on number of cards), as various players implement this with a lag,” said Suresh Ganapathy, associate director, Macquarie Capital. Hence, in the interim, we would not have a clear picture on market shares. This should impact other players like SBI Cards, ICICI Bank as well with a lag.”

While SBI Cards’ market share based on the number of cards in force increased to 19.2% in August 2022, HDFC Bank and Axis Bank saw their market share fall from 22.4% and 15.5% in July to 21% and 14.7%, respectively, in August.

The central bank’s rule states that if a credit card has not been used for more than one year, the process to close the card shall be initiated after intimating the cardholder. If no reply is received from the cardholder within 30 days, the card account shall be closed by the card-issuer, subject to payment of all dues.

Experts say that closure of cards due to customer inactivity is likely to lead to further fall in cards in force.

“This closure of cards due to customer inactivity would lead to change in the total number of cards outstanding and hence the current number as disclosed might undergo a few adjustments ahead,” said ICICI Securities analyst Ansuman Deb.

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