Introduction
Despite the growth in India’s credit ecosystem, credit card penetration remains surprisingly low, with only 25% of the credit-active population using credit cards. According to Bhavesh Jain, Managing Director and Chief Executive of TransUnion CIBIL, the contribution of credit cards to the overall credit ecosystem has decreased.
Key Statistics
There are currently 5.2 crore credit card holders in India, which is a significant proportion of the population. However, this number is lower compared to other countries, such as Colombia, Hong Kong, the USA, and the UK. The white paper released by TransUnion CIBIL highlights the decline of credit cards as the dominant unsecured product in a customer’s wallet, with alternatives like Unified Payments Interface (UPI) and personal loans gaining popularity.
Challenges and Opportunities
The merchant discount rate, which can go up to 2% per transaction, is a significant challenge for credit card usage. Additionally, the inability to add credit cards from other networks, such as Visa and Mastercard, to UPI apps restricts usage to the state-promoted Rupay. Despite these challenges, the last decade has seen growth in outstanding balances, consumer holding cards, and the number of cards in circulation.
- The number of people holding three or more credit cards has increased to 22% from 12% a decade ago.
- Live cards’ share in consumption loans has decreased to 38% from 56% in the same timeframe.
- The younger population is more likely to own a credit card, and credit card ownership is no longer limited to metro areas, with semi-urban and rural populations also adopting them.
Improving Asset Quality
From a portfolio quality perspective, the COVID-19 crisis had a temporary impact, but the broader quality has shown improvements. The percentage of credit card outstandings unpaid for between 91 and 179 days has reduced to 1.7% in the year to March 2026 from 2% in the year-ago period.
Source: Original Article
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