A whopping 54 crore bank customers or nearly half of India’s population shall be issued debit cards in the next three years, signalling impressive strides in making banking inclusive for all.
However, the number of credit cards would remain at less than three crore during the same period, a recent study by Assocham, released Sunday, said.
By the end of last year, nearly 31.44 crore bank customers were issued debit cards. This number is growing at a compound annual rate of 18 percent, and this pace is expected to be sustained, if not improved, with the focus on higher bank inclusion, the study said.
“This would take the number of bank debit cards to well over 54 crore in the next three financial years,” it said.
However, the number of credit cards, largely a phenomenon in metro cities among the middle and more affluent classes, is not growing at even half the rate of the debit cards.
By December 2012, the number of credit cards in the market was just 1.88 crore, with an annual growth of barely six to seven percent.
Consumers are shying away from credit cards in view of the exorbitant rates of interest and excessive penal rates for even minor delay in payments, the study revealed.
“The so-called plastic money culture, implying living on borrowed money, has not really caught on in India. Part of the blame lies with card issuers, which have kept so many hidden charges, making users feel deceived,” pointed out Assocham president Rajkumar Dhoot.
Besides, there are regular reports about fraud, with the misuse of credit card transactions.
The increasing cyber crimes, originating from data theft and hacking, have also led to loss of public confidence in plastic money, especially credit cards.
However, the debit cards are largely being used for cash withdrawal and not much at the merchandise stores, given the conservative nature of this class of customers.
The ‘point of sales’ usage was limited to just about Rs.6,909 crore monthly sales in December 2012 by debit card-holders, whose number was about 16 times more than that of credit card holders.
In contrast, the ‘point of sale’ at the merchandise stores by the credit card holders was about Rs.11,132 crore in December 2012.
Similarly, cash withdrawals or borrowing by credit card holders was limited to a monthly figure of around Rs.124 crore, as compared to a stupendous Rs.1,46,125 crore by debit card holders.
“Debit cards are performing the role of bank cashiers, through ATMs,” the Assocham study pointed out.
There are other benefits accruing to both the banks and customers through increased use of debit cards. These include less crowding in bank branches and convenience of any-time, round-the-clock banking to the customers through the use of the Automatic Teller Machines (ATMs).