New Delhi: The credit card industry in India is experiencing a slowdown, with growth in disbursements reaching a four-year low, as reported by ACMIIL, a stock market analysis firm.
The report, which examines the credit card market for January 2025, reveals a decrease in overall spending and a reduction in the number of credit cards in circulation.
Total credit card spending in January amounted to Rs 1.84 trillion, reflecting a month-on-month (MoM) decrease from Rs 1.88 trillion in December 2024.
However, on a year-on-year (YoY) basis, spending increased by 14 percent. The MoM decline is attributed to a high spending base in December, a month typically characterized by increased activity due to year-end festivities and New Year celebrations.
The report also noted that transaction volumes mirrored this trend, decreasing by 1 percent MoM to 430 million transactions. Nevertheless, YoY transaction growth remained robust at 31 percent.
Despite this, the report highlighted that this marks the weakest YoY growth in transaction volumes since March 2024, indicating a continued slowdown in the sector.
The report stated, "This represents the weakest YoY growth in transaction volumes since March 2024, highlighting a persistent deceleration trend within the sector."
In January, the number of active credit cards fell by 1.2 million, reducing the total from 110 million in December to 109 million. Additionally, the average spending per card experienced a slight decline, dropping to Rs 16,911 from Rs 17,093 in the previous month.
Meanwhile, the top five banks maintained their dominance in the credit card market, holding a 75% share of outstanding cards.
The report indicated that although credit card usage is increasing each year, the rate of growth is beginning to decelerate. The reduction in monthly spending and transaction volume growth points to a more cautious consumer attitude and potential market saturation.
As the industry progresses, banks and financial institutions may need to implement innovative products and tailored incentives to stimulate usage and sustain growth in the fiercely competitive credit card sector.
