Credit Card Penetration Lower in India Despite Asset Quality Improvements: Cibil

Credit card penetration in the country has been low when compared to even developing countries despite a variety of tailwinds like improving delinquency levels, a top official at Transunion Cibil said on Wednesday.

The product's contribution to a wider credit ecosystem has gone down, with only 8% of new additions being new to credit as against 26% in the year-ago period, Bhavesh Jain, the Managing Director and Chief Executive of the company, told reporters.

India has 5.2 crore people having credit cards, which is just 25% of the overall credit active population of about 25 crore people, he said, adding that developed and developing countries have a higher proportion of people using credit cards.

A white paper prepared by the credit information company said the same proportion stands at 62% in Columbia, 98% in Hong Kong, 81% in the USA and 70% in the UK.

Over the years, credit cards -- which are majorly used for consumption purposes -- have ceased to hold the dominant unsecured product in a customer's wallet, it said, noting that there are alternatives like Unified Payments Interface, personal loans, etc, which it competes with.

It can be noted that at present, there is a merchant discount rate that is charged for every credit card transaction at up to 2% while there are also sweeteners like reward points for transactions which a user enjoys.

Also, at present, a user is not able to add credit cards of other networks like Visa and Mastercard to UPI apps, which restrict usage to the state-promoted Rupay.

The last decade has witnessed growth across many numbers, including outstanding balances up 8.3x  to ₹3.1 lakh crore, consumer holding cards up 3.6x to 5.2 crore and the number of cards being up 5.1x to 10.7 crore cards.

The number of people holding three or more credit cards in their wallet has grown to 22% from 12% a decade ago, it said, adding that live cards' share in consumption loans has decreased to 38% from 56% in the same timeframe.

The younger population is more likely to own a credit card, but the interesting aspect is that from a geographical spread perspective, such cards have now ceased to be a metro phenomenon to be something, which are also owned by semi-urban and rural population, Jain said.

From a portfolio quality perspective, the white paper said there was a blip during the Covid-19 crisis, which is behind now and the broader quality has shown improvements.

Credit card outstandings unpaid for between 91 and 179 days reduced to 1.7% in the year to March 2026 from 2% in the year-ago period, it said.