Credit Card issuance soars despite worries over unsecured loans

Credit card base grew 18% year on year (y-o-y) to reach an outstanding base of 103 million as on end May 2024, with HDFC bank adding the highest number of new cards, and Kotak Mahindra bank seeing a sharp drop amid RBI restrictions. Spendings by credit cards also grew 17% to reach Rs 1.65 trillion, according to a report by Motilal Oswal Financial Services.

The credit card industry has seen a continuous decline as major players are cautious of large unsecured loans and amid asset quality issues.

“The industry has seen a continuous decline from the base of January this year owing to the lack of the festive season. We believe that June and July too will see tepid growth, and thereafter, the festive season will bring some improvement”, said Nitin Aggarwal, Research Analyst at Motilal Oswal Financial Services.


Kotak Mahindra Bank witnessed a growth of 43% in card spending indicating that the bank was engaged in cross selling of products after RBI imposed restrictions on the bank on April 26 from issuing new cards and onboarding customers online.

Card spend grew 31% for ICICI Bank and just about 3% for HDFC Bank. IDFC Bank and Federal Bank reported faster growth of 52% and 43% YoY, respectively.

Credit cards on UPI have been witnessing a constant growth with total payments growing 35% on year since May 2024. The spending via UPI on credit cards stood at Rs. 20.3 trillion. Market share of UPI is 86% in FY23.

Average ticket size of UPI credit card transactions have continuously been declining since from Rs. 1,838 in FY21 to Rs. 1,528 in FY24. This suggests the increasing penetration of UPI in everyday transactions as person to merchant(P2M) transactions increased.

The volume of P2M transactions almost doubled with 8,804 transactions in May 20204, from 4,826 transactions a year ago, according to data from the National Payments Corporation of India.