- विज्ञापन -
New Delhi: Credit card usage has seen a significant increase over the past three years, fueled by higher consumer spending and the growing popularity of digital payments. However, non-performing assets (NPAs) in the credit card sector have also risen by 28.42%, reaching Rs 6,742 crore during the 12-month period ending December 2024, as per the latest data from the Reserve Bank of India.
There has been an increase in Credit card non-performing assets (NPAs). It refers to unpaid dues overdue for more than 90 days. As per RBI, it rose by 28.42% to Rs 6,742 crore in December 2024, up from Rs 5,250 crore in December 2023. This represents an increase of nearly Rs 1,500 crore in just one year. This surge indicates that more people are struggling to repay their credit card debts, reflecting financial stress among borrowers.
Let’s understand the reason behind the growth of usage of credit card. Over the past three years, credit card usage has spiked due to increased consumer spending and the popularity of digital payments. The total outstanding credit card loans grew from Rs 2.53 lakh crore in December 2023 to Rs 2.92 lakh crore in December 2024. Despite this growth, the percentage of NPAs relative to total outstanding loans increased slightly from 2.06% to 2.3%, showing that defaults are growing faster than the overall credit expansion.
Since December 2020, when NPAs were Rs 1,108 crore, defaults have risen by over 500%. This dramatic increase underscores a growing reliance on credit and challenges in repayment over time. It is suggested that weaker economic conditions may be reducing people’s ability to manage their debts.
In November 2023, the Reserve Bank of India (RBI) raised the risk weight on credit card receivables and other consumer loans by 25%, bringing it to 150%. This means banks must set aside more capital to cover potential losses, aiming to curb risky lending practices and prevent a credit bubble. The RBI noted that while demand for credit remains strong, this regulatory change has slowed the growth rate of consumer credit, particularly for personal loans and credit cards.
Credit card transactions tripled in three years, reaching Rs 18.31 lakh crore by March 2024, up from Rs 6.30 lakh crore in March 2021. This reflects a post-pandemic recovery in consumer confidence and spending, especially via digital channels. In January 2025, monthly transactions hit Rs 1.84 lakh crore, compared to Rs 64,737 crore in January 2021, showing continued growth. The number of credit cards in circulation increased to 10.88 crore by January 2025, up from 9.95 crore in January 2024 and 6.10 crore in January 2021, indicating widespread adoption.
Credit card dues are unsecured loans, meaning there’s no collateral backing them. If payments are delayed beyond the interest-free period (typically part of the billing cycle), banks charge steep interest rates of 42-46% per annum. This can trap borrowers in a cycle of debt, especially if they only pay the minimum amount due, leading to a drop in credit scores.
