India’s Credit Card Growth Slows: Disbursement Hits 4-Year Low

India’s credit card industry is witnessing a slowdown, with disbursement growth hitting a 4-year low. January 2025 saw a decline in total spending and a reduction in the number of credit cards in circulation. While major banks still dominate the market, cautious consumer sentiment and market saturation are becoming evident.

Credit Card Sector Faces Slowdown in Growth

India’s credit card industry has experienced a significant deceleration, with credit disbursement growth falling to its lowest level in 4 years. According to a report by ACMIIL, a stock market research firm, January 2025 recorded a drop in both total spending and the number of credit cards in use.

Total credit card spending in January stood at ₹1.84 trillion, reflecting a month-on-month (MoM) decline from ₹1.88 trillion in December 2024. Despite this dip, spending remained 14% higher on a year-on-year (YoY) basis.

The MoM decline was attributed to December’s typically high spending levels due to year-end festivities and New Year celebrations.

Decline in Transactions and Credit Card Count

Transaction volumes also followed a downward trend, dropping 1% MoM to 430 million transactions in January. However, YoY growth remained strong at 31%.

Even so, the report highlighted that this was the weakest YoY growth in transaction volumes since March 2024, signalling a prolonged slowdown in the sector.

Additionally, the total number of outstanding credit cards fell by 1.2 million, reducing the total to 109 million, compared to 110 million in December. The average spend per card also saw a slight decline, dipping to ₹16,911 from ₹17,093 in the previous month.

Market Trends and Consumer Behaviour

Despite the overall slowdown, India’s top 5 banks continue to maintain their dominance in the credit card market, holding a 75% market share in terms of outstanding credit cards. The report suggests that while credit card usage continues to expand on an annual basis, the rate of growth is slowing.

Conclusion

The credit card industry in India remains strong, but its growth trajectory is slowing down. While YoY spending and transaction volumes are still increasing, the decline in MoM figures points to a shift in consumer behaviour.

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