Key Market Insights:

1. Credit Card Spending Shows Seasonal Decline but Strong YoY Growth

• Total credit card spending stood at ₹1.8 trillion, reflecting a 2% month-on-month (MoM) decline but a robust 14% year-on-year (YoY) growth.
• The MoM decline is attributed to a high base effect from December 2024, when festive and holiday-related spending boosted transaction volumes.
• The average spend per card dipped 1% MoM to ₹16,911, while the average spend per transaction declined 1% MoM and 15% YoY to ₹4,282, indicating evolving consumer behavior and macroeconomic adjustments.

2. Credit Card Transactions & Issuance Witness a Slowdown

• Total transaction volume reached 430 million, a 1% MoM decline but still 31% higher YoY. However, this marks the slowest YoY growth since March 2024, reflecting cautious consumer spending.
• The number of outstanding credit cards declined to 109 million, down from 110 million in December 2024. 1.2 million cards were withdrawn in January, possibly due to tightening credit norms and increased delinquencies.

3. Market Leaders Continue to Strengthen Their Positions

• HDFC Bank, SBI, and ICICI Bank remain dominant players, collectively maintaining a significant share of the credit card market.
• HDFC Bank’s market share increased from 20.2% to 21.5% YoY, reflecting strong customer acquisition efforts.
• SBI recovered from a temporary dip, increasing its share to 18.8%, with 2.4 lakh new cards issued in January.
• ICICI Bank also regained ground, rising from 16.3% to 16.6% YoY.

4. Midcap and Small-Cap Banks Show Mixed Performance

• Yes Bank’s market share has remained stagnant at 2.2% since September 2024, signaling a slowdown in its previous aggressive expansion strategy.
• IDFC First Bank emerged as an outperformer, increasing its market share from 2.4% to 3.1% YoY through an aggressive push in credit card issuance.

5. Kotak Mahindra Bank’s Credit Card Embargo Lifted

• A significant regulatory development in February 2025: The RBI lifted Kotak Mahindra Bank’s 10-month embargo on credit card issuance.
• This move is expected to help Kotak regain lost market share, which had slipped to 4.6% YoY. The bank’s re-entry is poised to impact competitive market dynamics in the coming months.

6. Disbursement Growth Hits a 4-Year Low

• The slowdown in credit card disbursement is at a 4-year low, signaling cautious lending practices by banks amid concerns over rising delinquencies and economic uncertainty.
• The total market share of the top 10 banks remains strong at 92%, showing continued consolidation in the industry.