Winning Bizness Sports Desk

Mumbai. The trend of spending through credit cards is increasing rapidly in the country and has reached a record level. According to the latest RBI data, credit card transactions reached an all-time high of Rs 1.48 lakh crore in August. Earlier in May it was Rs 1.40 lakh crore. This is an indication that the debt burden on people is increasing and their savings are declining. But along with this, a new kind of threat is also looming over the country's financial system. By the financial year 2023, the number of credit cards in the country will reach 8.53 crore which was 7.36 crore a year ago. With the increase in the prevalence of credit cards, its NPA has also increased in the country. Between April and December last year, NPA or bad loans of banks' credit cards had increased by 24.5 percent. It increased by Rs 765 crore to reach Rs 3,887 crore in the first nine months of FY 2022. This is about 2.16 percent of the total credit card outstanding. This amount may seem minor to you but it is continuously increasing. RBI itself has also expressed concern over this. The central bank has warned banks on unsecured loans like credit cards and personal loans amid inflation and high interest. After the pandemic, banks have expanded their balance sheets by increasing individual funding, while there has been no significant increase in credit demand from companies during this period.

People have taken huge loans from banks

In the financial year 2023, the net financial savings of households has declined by about 55 percent to 5.1 percent of GDP. During this period, their debt has increased to Rs 15.6 lakh crore, which is more than double that of the financial year 2021. During this period, people have taken huge loans from banks. However, this trend has been seen not only in India but throughout the world. Even in America and the UK, people are spending heavily on credit cards. In both these countries too, credit card transactions reached records between March and August. Credit card debt in America reached one billion dollars a month ago.

Credit cards and personal loans come as unsecured loans

Credit cards and personal loans come under the category of unsecured loans because they do not require any collateral. Therefore their risk of defaulting is highest. If you use a credit card, the bank gives you two options. You can repay the entire amount till the due date or you can pay a minimum amount. The money saved by paying the minimum amount by the due date is added to the next month's billing cycle. But if a person does not pay the minimum amount within 90 days then he is declared NPA. Now a new type of fraud is emerging in the form of credit card defaulter which can hollow the financial system of the country.