India Credit Card Growth Slows: RBI Scrutiny, Rising Debt

India’s credit card industry is experiencing a significant slowdown in growth, marked by a sharp decrease in new customer additions. This moderation follows increased scrutiny from the Reserve Bank of India on unsecured consumer lending.

The rapid expansion seen over the last decade, with circulation growing 3.6 times, has tempered. Lenders are now shifting focus from aggressive customer acquisition to maintaining asset quality amidst rising consumer debt.

• Only 4 million new credit card users were added in the last two years.
• This contrasts sharply with 16 million new users in the preceding four years.
• Outstanding balances are nearing ₹3.1 trillion.

The Reserve Bank of India (RBI) is closely monitoring unsecured consumer lending, a factor contributing to the industry’s shift. Consumer debt now stands at 45.5% of India’s GDP, up from 39.2% in March 2021.

This rise, recorded by September 2025, has been accompanied by an increase in payment defaults and growing financial pressure on households. The average annual growth rate of credit card balances has consequently slowed from its previous 24%.

Borrowing behaviors are changing, with credit cards making up a smaller proportion of total household debt. The demographic of card users is also evolving, indicating a higher risk profile for lenders.

• The percentage of first-time cardholders has fallen to 11%.
• This is a decline from 20% recorded in March 2020.

Many new users already manage multiple personal loans, posing a heightened risk if their income does not keep pace with their increasing debt obligations.

Understanding Asset Quality Concerns

Analysis of payment behavior highlights significant concerns regarding asset quality within the credit card sector. While short-term delinquencies, defined as three to six months overdue, have remained stable, long-term delinquencies exceeding six months overdue are consistently rising.

• High-exposure users, who heavily rely on credit cards alongside other unsecured loans, constitute the largest segment of non-prime borrowers.
• Non-prime borrowers are individuals with credit scores below 750.

The growth in these non-prime segments suggests potential pressure on profit margins for banks and non-banking financial companies (NBFCs). This pressure could intensify if credit costs increase due to defaults, prompting investors to closely monitor delinquency trends in unsecured loan portfolios.

Lenders are now expected to tighten approval criteria to safeguard against defaults. This strategic shift aims to prioritize credit quality over the pursuit of volume growth in customer acquisition.