In 2009-10 banks cancelled 6 million credit cards and reduced issuing of cards

In 2009-10 there was sharp cut down on issuing of credit cards and many banks closed a number of cards during this period. According to records last fiscal six million credit cards or about a quarter of the total number of cards a year were cancelled.

According to the data provided by the Reserve Bank of India by March 2010, around 18.3 million of cards were circulated this was the level about five years ago.

In June 2008 credit card industry has touched a peak level of 27 million cards after this in two years time slide in credit card industry started and in next nine months, the industry cancelled about three million cards.

Then in the last fiscal especially in March 2010, there was increase in pace when around two million cards were out of use.

During economic slowdown there was increase in defaults in the credit card industry as well as unsecured personal loans portfolio due to which many banks started restructuring their growth strategy. Apart from this, the strict warnings from RBI and court regarding aggressive recovery practices forced many banks to go slow in this business.

Besides cutting down in new issuances, banks also started cutting down credit limits for existing customers to reduce risk in default. Also the accounting rules forced banks to cull out inactive and risky cards as they were required to set apart more capital against unused credit limits.

These measures have even resulted in drop in card spending, in 2009-10 card spending dropped to 4%. Thus total credit card spend fell to Rs 62,852 crore.

As a result the top players of credit card industry such as ICICI bank, the top card issuer, cut the number of its cards by a third during the last one year.

At present it is having about five million cards against a peak of about nine million cards two years ago.

Banks also tightened their credit card norms thus they issue cards very selectively - only to customers with whom it has a long-standing relationship.

At its peak level bank was issuing over two lakh cards a month.

Now it is less than a thousand a month.

However, now you are not thrust with unsolicited credit cards. In fact it has become difficult to get a credit card.