India’s credit card market has grown rapidly over the past decade, but has not yet reached its potential, only!According to a report by TransUnion CIBIL, credit card penetration is still limited, with only one in four credit-active consumers owning a credit card.Bhavesh Jain, managing director and chief executive of the credit information company, said India currently has 5.2 crore credit card holders out of a total credit-active population of about 25 crore. He said usage remains low compared to many developing and developed markets despite improvements in crime levels and other favorable factors.According to the company, credit card penetration is 62% in Colombia, 70% in the UK, 81% in the USA and 98% in Hong Kong. In contrast, in India the number is 25%.The report also found that credit cards are contributing less to the expansion of the country’s formal credit ecosystem. Jain said the share of customers adding new credit cards is only 8%, compared to 26% a year ago.Over the past few years, credit cards have also lost their position as the dominant unsecured credit product in consumers’ wallets. The white paper said they now compete with alternatives such as Unified Payment Interface (UPI) and personal loans.Currently, there is a merchant discount rate of up to 2% on credit card transactions, while users get benefits like reward points. However, users can currently add only state-promoted RuPay credit cards to UPI apps, while cards issued on other networks like Visa and MasterCard are not supported.The report highlights significant growth in the industry over the past decade. Credit card outstanding has increased 8.3 times to Rs 3.1 lakh crore, while the number of credit card holders has increased 3.6 times to 5.2 crore. The number of credit cards in circulation has increased 5.1 times to 107 million during the same period.Consumer behavior has also changed. The share of people holding three or more credit cards has increased to 22% from 12% a decade ago, while the share of live credit cards in consumption debt has fallen from 56% to 38%.Jain said younger consumers remain more likely to have credit cards. He also said that credit card ownership is no longer limited to metropolitan cities and has spread to semi-urban and rural areas.The white paper on portfolio quality said the downturn seen during the Covid-19 pandemic has now passed. Credit card outstanding 91 to 179 days declined to 1.7% in the year ending March 2026, compared to 2% a year ago, indicating improvement in broader portfolio quality.
