Pent-up demand lifts spending through credit cards
Spending through bank cards continued to keep an upward style in November, an indicator that clients are upgrading their consumption sidestepping worries of economical losses stemming right from the coronavirus pandemic.
Total card loans placed by lenders stood at Tk 1,434 crore in November, up 4 % from a month previous and 20 % year-on-year, showed Bangladesh Lender data.
The rise in transactions through bank cards can be an indication of a "pent up demand" throughout the market as nearly all consumers had held back their spending during the lockdown and the next few months, authorities said.
Pent up demand identifies a predicament when demand for something or product is unusually strong.
Economists generally utilize the term to describe the overall public's go back to consumerism following a good amount of decreased spending.
Spending through bank cards drastically transpired in the next quarter of 2020 as a result of the strict restrictions about movement imposed simply by the government to keep carefully the deadly coronavirus away.
Credit cardholders registered an archive volume of transactions to the tune of Tk 1,552 crore found in August during Eid-ul-Azha, one of the primary festivals for Muslims. The shape, however, came up down sharply in September.
But the spending started to bounce back heavily since October.
Mashrur Arefin, managing director of City Bank, said their organization from credit cards has already widened more than that of the pre-pandemic level due to the stored demand among consumers.
"We are now issuing a wide array of cards per month and the quantity of transaction can be increasing," he said.
City Bank is the top player found in the country's credit card market. It has issued around 5.50 lakh cards.
The hospitality and tourism sector has recovered its business to a big extent, putting a positive effect on the spending through bank cards.
He went on expressing trust that the upward tendency in spending would continue found in the months ahead due to many of people have grown to be habituated to using credit cards in recent periods so as to maintain community distancing when purchasing things.
Worries of the coronavirus has come down as people have learnt to live with the pandemic, Arefin said.
This has helped people spend cash more, he said.
Mamun Rashid, a personal sector analyst, echoed the same, saying that stored demand has played a pivotal role found in fuelling spending through bank cards.
People now avoid home markets and are increasingly preferring supermarkets as a way to protect themselves from Covid-19, he said.
The pandemic in addition has pushed the quantity of e-commerce sales, making a good impact on purchases through credit cards, he said.
Mahiul Islam, head of retail banking at Brac Bank, said his lender now issues a good number of credit rating cards per month because of surging demand from clientele.
The bank, among the greatest card-issuers in Bangladesh's banking sector, is also enjoying an upward trend in transactions through the digital tool.
People have little concern over the pandemic, helping banks strengthen their credit card business, Islam said.
The quantity of transactions totalled 25.58 lakh in November in contrast to 23.54 lakh in October.
Monzur Hossain, a research director of the Bangladesh Institute of Production Studies, said the purchasing power of individuals was getting stronger in the wake of the quickly pace of the monetary recovery.
This has resulted in a growing trend in spending through bank cards, he said.
Syed Mahbubur Rahman, taking care of director of Mutual Trust Bank, said they too were enjoying the same experience as that of City and Brac banks.
The bank, which includes so far provided 55,000 bank cards, now issues 4,000 to 5,000 cards monthly.
He, however, said there is a possibility a significant amount of cardholders have been forced to depend on credit cards as a result of ongoing business slowdown.
The crisis could also fuel the rise in make use of credit cards as well, Rahman said.
The issuance of credit cards was on the upsurge in November when the outstanding number of banks' bank cards stood at 16.51 lakh whereas it was 16.31 lakh per month ago.
