There is reportedly a yawning gap between bad loans on credit cards issued by public sector and private banks. Given that India’s lender burden is difficult (especially state-owned countries), this has been under control in recent years, this must not escape notification. After painful and long cleaning, banks must not repeat past mistakes.
Unfortunately, there is a lot of credit advice left on the plastic cards of the Public Sector Bank (PSB). In an effort to rush to capture a larger portion of the “revenge purchases” witnessed in the wake of the COVID pandemic, PSBs may discriminate less in card issuance, with the result that their non-performing loan ratio was 12.7% at the end of September, much higher than the 2.1% reported by private banks.
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These data from nursing ratings highlight the widespread focus on individual debt. Liberal registration seems to have made credit card holders splurge on a variety of goods and services. However, many of them may not realize that if the interest-free ROI (usually one month, usually one month) is exceeded, the credit can prove how expensive this is. The penalty for failing to meet the minimum repayment obligation is serious, while the interest fee is long-lasting, usually the interest rate charged by other unsecured loans provided by the bank to clients.
It is worth noting that the success of India’s unified payment interface (UPI) has not hindered the surge in credit card usage. According to the Reserve Bank of India (RBI), by the end of 2024, the number of active cards in India has climbed to 108 million, almost twice the number five years ago, according to the Reserve Bank of India (RBI).
This is very interesting.
Since UPI allows fast cashless payments, bank transfers via QR codes scanned by smartphones, credit cards are no longer the easiest way to pay cashlessly within India, even if they are still very useful, especially for car rentals, etc., companies may need to “hold” a large number of claims to cover potential losses or other dues. Generally speaking, the utility of plastics has been reduced to getting instant credit for retail purchases due to the wide local acceptability of UPI.
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Of course, these cards can also be used to create clean billing records with good credit scores, and they usually have decor like reward schemes, but none of them are their core purposes.
Credit cards exist today, and holders undoubtedly use the loan: saying that to make large purchases, one of the bank accounts is underfunded. Despite the lines of credit, splurges can easily lead card users to a debt trap given how debt becomes a rapidly rising repayment burden.
Interest rates are high, not everyone has the danger of being trusted for more than a few months. While card issuers may make a lot of money, they must weigh their benefits against default risks.
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Household debt is generally the radar of the Reserve Bank of India. It is Financial stability report In 2024, it was pointed out that the level of co-leading has risen compared with June 2021. However, the vulnerability to overuse of credit cards requires specific attention. It requires reset based on their review Raison d’Etre In today’s UPI era.
As a loan device, credit cards will better achieve their goals if they are issued to users with more reputable but significantly lower rates. This way, they are unlikely to put people in debt and expand the bank’s dud assets. It’s time to retouch the math behind plastic.
