Adoption of credit cards in India

We can’t deny the fact that, people in the country trust the credit card than any other payment transaction mode . The growing trust in credit cards as a preferred payment method is because credit cards offer convenience and flexibility, allowing individuals to make purchases without carrying large amounts of cash. This convenience is especially significant in an increasingly digital economy where online shopping and electronic payments are commonplace.

Indeed, the rapid proliferation of credit cards in India over the past decade, along with increased spending and defaults, presents significant challenges. This surge in credit card usage reflects both the growing consumerism and the increasing availability of credit in the Indian market.

Addressing the credit card pandemic in India requires a multi-faceted approach involving regulatory measures, financial literacy programs, and responsible lending practices by financial institutions. A recent report shows, credit card spending has skyrocketed to alarming levels in India, and so have the defaults.

This comes at a time when getting a credit card has become easier than ever before, with banks and financial institutions aggressively promoting their offerings to consumers across the country.

Data from the Reserve Bank of India shows that there were less than 2 crore active credit cards in India as of December 2011 and the figure increased to just over 2 crore by the end of 2014. A slight rise in three years. The number of active credit cards in India did not cross 3 crore in the next two years. By the end of 2018, the number of active cards was at 4.4 core.

Though credit card numbers in 2018 had more than doubled in comparison to 2011, it was nothing compared to the boom that was seen between 2019 and 2023. During this period, there has been a significant rise in the number of active credit cards in the country – from 5.5 crore as of December 2019 to almost 10 crore as of January 2024.

Finally, the rise in credit card issuance signifies a shift in consumer behavior towards cashless transactions and the convenience offered by credit cards for making purchases, both online and offline. However, along with this convenience comes the risk of overspending and accumulating debt beyond one's means to repay, leading to defaults and financial strain for individuals and the economy as a whole.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA