Credit Card Slowdown Sees Private Banks Tighten Grip Amid Declining Issuance

India's credit card market faces decelerated growth as new card issuance drops by 28%. Private sector banks strengthen market control with a 730 basis point rise in card issuance market share. Public sector banks, however, gain ground in key retail loan segments like personal, home, and auto loans.

India's credit card industry is experiencing a noticeable deceleration in growth, with new card issuance sharply declining, despite private banks continuing their dominance. A report by JM Financial Institutional Securities highlights that new credit card issuances fell to 4.4 million in the second quarter of FY26, marking a 28% year-on-year decrease from the 6.1 million cards issued last year.

The sluggish pace in card circulation growth, which remained at 6% year-on-year, reflects a broader moderation in consumer credit expansion. This slowdown extends to outstanding credit card balances, where growth diminished to 9% year-on-year in 2QFY26, significantly down from the previous year's 20%, primarily due to dampened card issuance trends.

Despite this deceleration, private banks have bolstered their market foothold. They accounted for 78% of all new credit cards issued during the quarter, while NBFCs and other players saw a decline, with private banks' market share escalating by about 730 basis points compared to FY25 levels.

Asset quality indicators depict a mixed landscape. Late-stage delinquencies (PAR 90+) improved from 15% in FY25 to 8.9% by 2QFY26. While early-stage delinquencies showed some progress, mid-stage delinquencies for private banks saw a slight increase during this time. Top issuers, however, continued to bolster their spending traction.

According to RBI data cited in the report, SBI Cards and HDFC Bank expanded their market share in credit card spends by 172 and 96 basis points, respectively, in FY26 so far. Conversely, banks like ICICI, Kotak Mahindra, RBL, and IndusInd lost shares. In key retail loan segments, public sector banks are gaining ground from private banks, particularly in disbursement market share in personal, home, and auto loans.

The report indicated that public sector banks have enhanced their position across unsecured and secured lending sectors, driven by higher average ticket sizes, better asset quality, and a gradual recovery in loan growth during the initial half and second quarter of FY26. In disbursements market share, PSBs advanced in personal, home, and auto loans, according to JM Financial's observations.

(With inputs from agencies.)