A recent report by the Reserve Bank of India (RBI) reveals a significant surge in the use of credit cards in India, while the number of debit cards has seen only a slight increase. The report highlights how India’s financial landscape has transformed over the past five years, with digital payments becoming more popular.
Credit Cards Double in Five Years
According to the RBI, the number of credit cards in circulation has more than doubled, jumping from 5.53 crore in December 2019 to around 10.80 crore by the end of December 2024. This growth reflects a shift in consumer behavior, with more people opting for credit cards for their spending needs.
In contrast, the number of debit cards has remained relatively stable. From 80.53 crore in December 2019, the figure rose marginally to just over 99.09 crore by December 2024. Despite this, debit cards continue to dominate the market in terms of sheer numbers.
Card Transactions on the Rise
The report also highlights a similar growth trend in card transactions. In 2024, credit cards were used for 447.23 crore transactions, totaling Rs. 20.37 lakh crore. Debit cards, on the other hand, were used for 173.90 crore transactions, amounting to Rs. 5.16 lakh crore.
“While the use of debit cards has declined, credit card usage has grown by more than 15 percent annually in recent years,” the RBI noted. This suggests that Indians are increasingly relying on credit for their purchases.
Public and Private Banks Lead the Way
Public sector banks (PSBs) have played a significant role in this growth. The number of credit cards issued by PSBs surged from 122.6 lakh in December 2019 to 257.61 lakh by December 2024 – an increase of over 110 percent.
Private sector banks (PVBs), however, dominate the market with a 71 percent share. As of December 2024, they issued 766 lakh credit cards. The RBI report states that PVBs have focused on digital solutions and co-branded cards to attract urban and affluent customers.
Decline in Foreign Banks’ Share
Foreign banks, meanwhile, have seen a decline in both the number of cards issued and their market share. From 65.79 lakh cards in December 2019, their numbers dropped to 45.94 lakh by December 2024. Their market share also fell from 11.9 percent to 4.3 percent during this period. The RBI attributes this decline to high fees and conservative lending policies.
Small Finance Banks Enter the Market
Small finance banks (SFBs) have also entered the credit card market, targeting underserved populations. By December 2024, they had issued 10.97 lakh cards, focusing on financial inclusivity and reaching customers who were previously excluded from formal banking systems.
Regulatory Changes Boost Digital Payments
The RBI has introduced several measures to promote secure and efficient digital payments. Since January 1, 2019, only EMV Chip and PIN-based debit and credit cards are allowed, enhancing security for cardholders.
Additionally, the Unified Payments Interface (UPI) has been expanded to include RuPay credit cards. This allows users to link their RuPay credit cards to UPI for making payments. The RBI has also permitted transactions involving pre-sanctioned credit lines issued by banks, further boosting the UPI network.
“The UPI network will now facilitate payments financed by bank credit. This can reduce costs and help develop unique products tailored to the Indian market,” the report stated.
Conclusion
As of December 2024, India’s financial system is characterized by the widespread use of credit and debit cards, with a total of 109.9 crore cards in circulation. The rapid growth of credit cards, driven by public and private banks, reflects a shift towards digital payments and credit-based spending. With regulatory support and technological advancements, India’s digital payment ecosystem is set to grow even further in the coming years.
