Consumer spending dips from Rs 12,000 to Rs 3,600 per credit card; gold loans see uptick

Card spending took a dip in the month of April. According to the SBI Ecowrap, the total value of credit and debit card transactions have decreased from Rs 1.51 lakh crore in January to around Rs 50,000 crore in April.

The SBI report stated that per card transaction has also declined from Rs 12,000 to Rs 3,600 in the case of credit cards and from Rs 1,000 to Rs 350 in the case of debit cards. "It could be also possible that consumer spending has shifted from luxury purchases to purchases of daily essentials and groceries," stated the report.

SBI said that their estimates of short-term consumer leverage (presented as sum of credit card, personal loans, advances against FD, shares, bonds outstanding, etc) that reached its peak in FY18 has declined significantly in FY20. Consumer leverage was at Rs 1.56 lakh crore in FY18. It has declined by a whopping Rs 50,076 crore in April.

"It may be noted that in April, there is always a decline, but in the current fiscal because of exceptional circumstances this decline, for example, is 16 times more than what happened in April 19. Now the question is how much of this consumer deleveraging in April is because of lockdown or lack of business and how much is because of consumers actually maintaining a discipline in consumer behavior. We believe this will be crucial in deciphering in which direction the asset quality of the banks are moving in FY21," stated the report.

The SBI report stated that consumers are also vigorously using gold holdings on their household balance sheet by taking gold loans.

Also, investments into gold ETFs for the months of April and May stood at Rs 1,546 crore. Gold ETF investments had picked up in January with investors putting in Rs 202 crore, while it reached an all time high of Rs 1,483 crore in February. Additionally, gold buying in the form of sovereign bonds saw investment of up to Rs 3,107 crore in the June quarter.

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