India’s credit-card spending boom is squeezing issuer margins as revolver balances shrink
Card spending has grown at nearly 27% CAGR since 2021-22, but customers are using cards more for payments than interest-bearing debt. SBI Cards’ June-quarter spending rose 14% year on year while receivables increased 3%; its revolvers were 22% of receivables, down from 40% in March 2020.
What happened
India’s credit-card issuers face margin pressure as customers increasingly use cards for payments rather than revolving debt. SBI Cards and HDFC Bank report
Key facts
- Card spending CAGR nearly 27% from 2021-22 to 2025-26
- Interest-bearing balances and EMI loans fell to about 11% of annual card spending from roughly 21% several years ago
- Revolver balances-to-spending ratio fell to 2.8% in June quarter from about 7% in 2019
- HDFC Bank card advances-to-spends ratio fell to about 17% from around 27% in 2018-19
- HDFC Bank portfolio yield impact: 50-60 basis points
- SBI Cards June-quarter retail spending rose 14% YoY to ₹94,033 crore
- SBI Cards receivables rose 3% to ₹58,269 crore
- SBI Cards revolvers were 22% of receivables, versus 40% in March 2020
- Profit per unit of card spending: 0.50% in 2025-26 versus 0.84% in 2016-17; estimated 0.43% by 2028-29
Why this matters
Payments, merchant-acquiring, loyalty and co-branding partnerships become more strategically valuable as issuers seek monetization beyond interest income from revolving card balances.
What to watch
- Revolver share of receivables at SBI Cards, HDFC Bank, ICICI Bank, Axis Bank and major fintech/co-brand portfolios.
- Receivables growth relative to card-spend growth, especially sustained double-digit spend growth with mid-single-digit loan-book growth.
- Net interest margins, interchange income, reward costs, credit costs and return on assets for card issuers.
- Changes in annual fees, reward redemption rates, cashback caps, lounge-access rules and EMI pricing.
- RBI rules on interchange, credit-card conduct, digital lending, co-brand arrangements and UPI-on-credit-card expansion.
- Delinquency and write-off trends after issuers tighten or selectively expand unsecured credit.
- Merchant discount-rate economics and the share of offers funded by merchants versus card issuers.
- Reprice premium and mass-market card portfolios through lower reward rates, higher spending thresholds and more annual-fee waivers tied to usage.
- Increase offers funded by merchants, brands and travel partners rather than issuer-funded cashback.
- Push EMI-at-checkout, balance transfers, personal loans, insurance and subscription bundles to rebuild yield and fee income.
- Use transaction data to target credit-line increases and installment offers toward customers with higher risk-adjusted borrowing propensity.
- Slow broad-based card acquisition, reduce low-value co-brand promotions and focus on affluent, salaried and high-frequency spend cohorts.
- Invest in UPI-linked credit-card use and commercial/card-to-account payment products to preserve transaction relevance, even at lower unit economics.