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Are banks done with India's credit card frenzy?

Dec 2, 2024

India's credit card craze might be hitting a bump. With over 100 million cards issued recently, banks are now reining in aggressive strategies. Costly perks like free airport lounge access are being scaled back. A regulatory shift has banks like RBL and SBI Card facing new challenges, pushing them to issue half the number of cards compared to last year. The shift towards co-branded cards indicates a strategic pivot in an evolving market. Tune in to unravel the twists and turns of this financial landscape!

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Quick takeaways

The issuance of credit cards in India has sharply declined as banks adjust to new RBI regulations requiring increased capital reserves.

Banks like RBL Bank and SBI Card are prioritizing high-quality accounts over quantity, focusing on profitability and customer value amidst rising costs.

Deep dives

Decline in Credit Card Issuance

The number of credit cards being issued in India has significantly declined, with banks issuing less than half the number of cards compared to the previous year. Factors such as the Reserve Bank of India's (RBI) decision to increase the risk weight on credit card receivables have made lenders more cautious. This decision means banks now need to set aside a larger amount of capital for credit card loans, prompting them to reevaluate their credit card issuance strategies. As a result, banks like RBL Bank are voluntarily reducing the overall number of credit cards in circulation, prioritizing quality over quantity.

Shifts in India's Credit Card Market: A Decline in Issuances and New Strategies

9min

For the last five years, India’s new-found love for plastic has been pretty visible. More than 100 million credit cards had been issued by banks by Feb 2024.

Banks, as we all know, are in a rush to sell more and more credit cards. To do this, they use a whole gamut of attractive offers. For example, free access to airport lounges became all the rage for the longest time. The footfall at these lounges went up significantly till banks slowly realised it was getting a bit too expensive. Which is why they started reigning these offers in.

Now, believe it or not, banks are slowly cutting down on the number of credit cards they’re issuing. In October 2025, banks issued less than half the number of credit cards they issued last year at the same time.

The most obvious reason for lenders being careful is a decision the RBI took in November last year. It increased the risk weight on credit-card receivables of banks and NBFCs. For banks, it was raised from 125% to 150%, and for non-banks from 100% to 125%.This basically meant that lenders would have to set aside more capital for their credit-card receivables.

But in this episode, we look at the trajectory of two lenders which rely heavily on credit cards—RBL Bank and SBI Card. Clearly, there is a lot more going on behind the scenes.

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Daybreak

Are banks done with India's credit card frenzy?

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Decline in Credit Card Issuance

Shifting Focus to Customer Quality

Remember Everything You Learn from Podcasts