Credit Card Loans Fall: Why Banks and Borrowers Should Care

Credit card loans have fallen to 4.7% of total retail loans, down from 5% a year earlier, reflecting a shift towards more prudent lending practices and a higher share of lower-risk mortgages.

Credit Card Loan Trends

Despite fewer delinquencies, credit card outstandings have slowed, with growth in outstanding credit card balances falling to 7.7% in October 2025, from 16.9% a year earlier.

Total outstanding credit card balances stood at ₹3.03 lakh crore as of October 2025, compared with ₹2.81 lakh crore in October 2024.

Reasons for the Decline

Analysts attribute the decline to the RBI's tighter norms on unsecured lending, higher risk weights, and issuance curbs, which have slowed new credit extensions.

Growth in personal and housing loans has also diluted the weight of the credit card portfolio as banks have favoured lower-risk assets.

Shift in Credit Card Portfolio

Outstanding balances are increasingly shifting toward mid- and high-limit credit cards, signalling a structural deepening of the credit card market.

Cards with limits between ₹25,000 and ₹5 lakh account for about 76% of total outstanding balances, while the ₹5 lakh-₹25 lakh segment has expanded steadily to ₹57,443 crore.

Expert Insights

Experts say that lenders have taken steps such as tighter underwriting, pruning of riskier cohorts, and closer monitoring, leading to an improvement in asset quality.

Private sector banks have consciously moderated issuance in low-margin, high-volume segments, leading to slower volume-led growth even as they continue to dominate the premium card segment and fee-based income streams.

Remember, this is a perspective, not a prediction. It's essential to do your own research and consider multiple sources before making any investment decisions.