Credit Card Dues Zoom: RBI

26 10 2008

As per the latest report from the RBI, the credit card dues have zoomed 86% year-on-year to Rs 29,056 crore as on August 29, 2008. This is higher than the 49% growth recorded last year.

 

 

At a time, when interest rates on credit-card dues have been raised by most issuers to 3.5% per month, from 2.5-3.0% per month, a rise of 86 %  is disconcerting.

 

 

This alarming development could be due to some or all of the following reasons :

 

  • The double-digit inflation coupled with the rise in EMI for housing and car loans, the middle class is unable to balance their household budgets, forcing them to spend on their credit-card.
  • With stock markets going through a bearish phase since January this year, the day-traders have lost a source of income, forcing them to borrow money on their credit-card for their living expenses.
  • With banks like ICICI going slow on unsecured personal loans and two-wheeler loans, it is possible that consumers are using the expensive credit cards to fund their consumer durable purchases

 

– G. Mohan

 

 

 

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