Credit Card Defaults increasing in India, Major Banks report Delayed Payments
Credit card users in India are now defaulting more on their payments. More and more people are unable to pay their bills on time. According to data from credit information bureau Crif Highmark, overdue credit card payments—called the portfolio at risk—rose to 7.6% in June 2024, up from 6.5% in June 2023. This shows that more credit card users are struggling to manage their debt. Check More Banking and Financial Data.
More People Falling Behind on Payments
Banks have reported a growing number of delayed payments, especially in the second quarter of the financial year. Major banks like Kotak Mahindra Bank, IndusInd Bank, RBL Bank, and Axis Bank have seen a rise in defaults. The data shows:
- Payments overdue for 91-180 days are now extending beyond 180 days.
- Defaults in the 181-360 days range increased from 0.7% to 0.9%.
- Payments overdue for more than 360 days grew from 1.3% to 1.7%.
This means that once people fall behind on payments, they are finding it difficult to catch up.
Higher Credit Card Balances and Costs
The average amount of money owed on each credit card increased to ₹32,233 by June 2024, up from ₹28,919 last year. Credit cards have very high interest rates, typically 3.75% per month, which adds up to about 45% per year. If users miss payments, they are charged additional penalties of 0.5% to 1%, making the debt even harder to repay.
Spending on Credit Cards Soars
Credit card spending in India has tripled in the last three years, according to the Reserve Bank of India (RBI):
- Total spending reached ₹18.31 trillion in FY24, compared to ₹6.30 trillion in FY21.
- About ₹6.51 trillion was spent at shops and merchants using credit cards.
In September 2024 alone, monthly spending on credit cards hit ₹1.76 trillion, compared to ₹72,319 crore in March 2021. This shows people are using credit cards much more for shopping and everyday purchases. Check More Banking and Financial Data.
Slower Growth in Credit Card Issuance
While the number of credit cards increased to 10.61 crore by September 2024 (up from 9.3 crore in September 2023), the growth has slowed down. A report showed that the number of new cards being issued dropped by half in October 2024.
RBI Steps In to Control Credit Card Debt
Credit card debt has grown rapidly, with total outstanding balances reaching ₹2.81 trillion by October 2024, compared to ₹2.49 trillion two years ago. To reduce this risk, the RBI increased the “risk weight” on credit card loans by 25% in November 2023. This move was aimed at slowing down spending and controlling the rise in credit card debt.
The Bottom Line
With rising defaults, increasing balances, and growing spending, credit card users in India need to manage their money carefully. Experts suggest better financial discipline and timely payments to avoid falling into a cycle of debt. Banks and the RBI are keeping a close watch to prevent further risks in the credit card market.
