Credit card spending and new issuances unexpectedly increased in July. According to the Reserve Bank's most recent data, credit card spending increased by 5.5% to '1.93 lakh crore, and new card issuances reached a five-month high of 4.25 lakh, indicating a revival in unsecured lending.
Key Highlights
- RBI data shows record July credit card growth in spending and issuances, signaling robust urban consumer confidence.
- Mainstream banks ramp up unsecured credit issuance, reflecting renewed risk appetite and resurgence in consumer demand.
This increase indicates a resurgence in unsecured lending, with major banks such as HDFC Bank and SBI Cards, which are industry leaders with over 24.8 million and 21.2 million customers, respectively, contributing to the growth.
HDFC Bank led the growth drive by adding 3.15 lakh cards, bringing its customer base to 24.8 million. SBI Cards, the second largest player in the segment, added 66,640 cards, bringing its total customer base to 21.2 million.
ICICIC Bank, the third-largest issuer, recovered in July by adding 67,664 new cards, bringing its total to 18 million. Axis Bank, which had also suffered losses in June, had added 1.22 lakh cards. Despite the addition of only 1,759 cards, Kotak Bank, which had seen the worst drop of 2.86 lakh cards in June, managed to remain profitable.
Also Read: SBI to Revise Credit Card Rules Effective 16 September 2025
Since November 2023, when the RBI requested that banks set aside 150% risk capital against their credit card outstanding, up from 125% previously, as this segment of the banks' unsecured loan books was growing at a 30% rate or higher.
Between FY21 and FY24, the unsecured books of banks at the system level were clipping at a rate of 25% per year, raising concerns about a credit bubble among regulators. As a result, the RBI increased the risk capital requirement for all other unsecured loans and bank loans to non-banks by 25 percentage points, to 125%. These were reversed last December, when the explosive growth slowed to single digits.
