A gradual shift is emerging in India’s credit card ecosystem as spending growth begins to slow and lenders adopt a more cautious expansion approach. The change reflects easing discretionary demand, lower average spending per card and tighter underwriting by banks amid rising concerns around credit quality.
Credit card spending increased 8.1% year-on-year in January 2026 to ₹1.99 lakh crore. However, this was slower than the 11% growth recorded during the same period a year earlier. On a sequential basis, spending declined 2.8% month-on-month as consumer demand cooled after the year-end spending surge. A report by a ratings agency noted that the moderation signals a structural shift in the market, where falling per-card spending and stricter lending standards are shaping the sector’s outlook. Average spending per card dropped to about ₹17,100 in January 2026, down 3% from the previous month. Among private sector banks, which dominate the segment, per-card spending declined 3% year-on-year to ₹17,496. In contrast, public sector banks recorded a 20% rise in per-card spending to ₹15,761, reducing the utilisation gap.
Private sector banks continued to lead the credit card ecosystem, accounting for 72.8% of total spending in January 2026. However, their market share declined by about 300 basis points over the past year as public sector banks expanded through improved digital onboarding and deeper penetration in tier-2 and tier-3 cities. The total credit card base also continued to grow, rising to 11.7 crore cards in January 2026 from 10.9 crore a year earlier. Private sector banks led issuance with 7.6% year-on-year growth, supported by co-branded partnerships with e-commerce and fintech platforms. Public sector banks followed with 7.1% growth, largely driven by the State Bank group. Foreign banks, however, saw their card base decline by about 6% as they focused on a more selective strategy targeting premium customers.
Despite the expanding card base, the market remains highly concentrated, with the top 5 issuers accounting for more than 80% of total spending. Digital transactions continue to dominate usage patterns, with online commerce contributing over 61% of credit card transactions. Online credit card transactions grew 7.3% year-on-year in January 2026, led by strong momentum among public sector banks, which recorded a 31.5% increase compared with 2.7% growth for private sector lenders. Outstanding credit card balances stood at ₹2.95 lakh crore in January 2026, only slightly higher than ₹2.92 lakh crore a year earlier. The share of credit card balances in total retail loans declined to 4.4% from 5% during the same period, reflecting stronger growth in secured lending such as housing and vehicle loans. For the year to date, credit card spending rose to ₹19.7 lakh crore in FY26 from ₹17.4 lakh crore a year earlier, marking a 12.9% increase. However, spending momentum weakened toward the end of the period as demand normalised and banks tightened risk controls.
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