India’s Credit Card Boom Still Lags Despite Better Asset Quality: CIBIL

Mumbai: Credit card penetration in the country remains low even when compared to developing countries, despite several headwinds such as improvement in default levels, a senior official from Transunion Cibil said on Wednesday.

Bhavesh Jain, the company’s Managing Director and Chief Executive Officer, told reporters that the product’s contribution to the broader credit ecosystem has decreased, with only 8 percent of new additions being new additions to credit, compared to 26 percent in the last year period.

He said that 5.2 crore people have credit cards in India, which constitutes only 25 percent of the overall credit active population of approximately 25 crore people, and added that the rate of people using credit cards is higher in developed and developing countries.

In the report prepared by the credit information company, it was stated that the same rate was 62 percent in Columbia, 98 percent in Hong Kong, 81 percent in the USA and 70 percent in the UK.

The company stated that over the years, credit cards, which were largely used for consumption purposes, stopped holding the dominant unsecured product in the customer’s wallet, adding that Unified Payment Interface, personal loans, etc. He stated that there are alternatives with which he competes, such as:

It may be noted that currently, a merchant discount rate of up to 2 percent is available on every credit card transaction, and sweeteners such as reward points for transactions that the user enjoys are also available.

Also, currently a user cannot add credit cards of other networks such as Visa and Mastercard to their UPI app, restricting usage to government-backed Rupay.

Over the last decade, outstanding balances have increased 8.3 times to Rs 3.1 lakh crore, consumer cards have increased 3.6 times to 5.2 crore and the number of cards has increased 5.1 times to 10.7 crore.

Stating that the number of people with three or more credit cards in their wallets increased from 12 percent to 22 percent compared to 10 years ago, the organization added that the share of live cards in consumption loans decreased from 56 percent to 38 percent in the same period.

Jain said the younger population is more likely to have a credit card, but what is interesting is that from a geographic spread perspective, such cards are no longer a metro phenomenon but something that the semi-urban and rural population also have.

In terms of portfolio quality, the technical report said that there was an interruption during the Covid-19 crisis, but this is now behind us and the overall quality has shown improvements.

It was stated that credit card debts unpaid between 91 and 179 days decreased from 2 percent in the previous year to 1.7 percent by March 2026.