Industry Odisha Bureau, Jul 27: A decade of explosive growth in India’s credit card market masks an uncomfortable reality: the product that once fueled the nation’s consumer finance revolution is losing its grip.
India’s credit card industry has mushroomed beyond recognition. Fifty-two million Indians now carry plastic in their wallets, up from 14 million in 2016 a 3.6-fold expansion that pushed outstanding balances to ₹3.1 trillion. Over 100 million cards are in active circulation. On the surface, it looks like an unstoppable ascent.
But beneath the headline numbers, something fundamental has shifted. As more Indians gain access to borrowing, they’re deliberately choosing to borrow in different ways. Credit card dominance is fragmenting into a landscape crowded with personal loans, digital lending platforms, and buy-now-pay-later schemes. The credit card’s share of total consumer debt has shrunk by 10 percentage points over the past decade. For the first time, regulators and lenders are confronting the limits of what cardholders will take.
The slowdown is unmistakable in the data. Between 2020 and 2024, banks added 16 million credit card customers. In the two years that followed, that figure collapsed to just 4 million. The pandemic exposed household fragility; what’s troubling is that financial stress never fully receded. Balances overdue for more than six months have been climbing steadily, a warning sign that borrowers are struggling under accumulated weight.
That weight is growing heavier. Consumer debt as a share of GDP nearly reached 46 percent by mid-2025, up sharply from 39 percent four years earlier. The Reserve Bank of India has repeatedly warned about rising household leverage. Consumption loans personal loans, credit cards, and similar products now account for roughly half of all household borrowing, a shift that inverts the traditional savings-first culture many policymakers hoped India would maintain.
The economics of credit card lending have become increasingly constrained. New cardholders entering the market in recent years already carry multiple other loans; 59 percent now manage two or more unsecured debt products simultaneously, compared with 41 percent a decade earlier. First-time credit card users now represent just 11 percent of India’s credit card base, down from 20 percent six years ago. Rather than expanding into virgin territory, the industry is mostly recycling existing borrowers who are spreading themselves across lenders.
Where cards once dominated, plurality now rules. A borrower might hold a credit card for everyday purchases, a personal loan for a wedding or home renovation, a digital lending platform for short-term gaps, and a point-of-sale credit facility for appliance purchases. Banks lose their preferential position as payment intermediaries; instead, they compete in a free-for-all with fintechs, NBFCs, and payment networks.
TransUnion CIBIL’s behavioral analysis reveals the risk: 10 percent of cardholders fall into a “high-exposure” category, holding multiple credit products simultaneously while carrying elevated debt loads. This group the heaviest users contains the largest share of subprime borrowers, those with credit scores below 750. A quarter of high-exposure users are non-prime, precisely the segment most vulnerable to income shocks or rising interest rates.
India’s credit card penetration remains only 25 percent of all borrowers, compared with 80 percent in the United States. That gap suggests dormant potential, yet emerging vulnerabilities argue for caution. The days of 24-percent annual balance growth appear to have ended. Rising defaults, competition from alternate credit channels, and visible household stress suggest India’s credit card boom has entered maturity and maturity brings complications lenders and regulators are only beginning to understand.
