Credit carries less weight on cards with tightening RBI norms

Mumbai: Outstanding credit card loans as a share of total retail lending fell in October, reflecting what analysts described as both prudential lending in the face of stricter regulatory norms and a higher share for lower-risk mortgages.Despite lower delinquencies, credit card outstandings fell to 4.7% of total retail loans in October 2025, compared to 5% a year earlier, Reserve Bank of India (RBI) data showed. The growth of the outstanding credit card balance within total private loans slowed sharply to 7.7% in October 2025, compared to 16.9% a year earlier.

The total outstanding credit card balance stood at ₹3.03 lakh crore in October 2025, compared to ₹2.81 lakh crore in October 2024.

“This is due to the RBI’s stricter norms on unsecured lending, higher risk weights and issuance restrictions, which slowed new credit extensions,” said Saurabh Bhalerao, associate director-BFSI research, CARE Ratings. “Also, growth in personal and home loans has diluted the weight of the credit card portfolio as banks have favored lower-risk assets. Outstanding balances are increasingly shifting to mid- and high-limit credit cards, indicating a structural deepening of the credit card market.”

Analysts say growth in the credit card segment has also weakened as banks have sharpened their focus on higher-quality customers, curbing massive issuance amid rising delinquencies in parts of the unsecured lending space.

Lenders have taken steps such as tightening underwriting, pruning riskier cohorts and closer monitoring, which has led to an improvement in asset quality.

“In recent quarters, credit cards have seen a slowdown in new originations, alongside an increase in delinquencies, due to both macroeconomic pressures and portfolio-level risks,” said Bhavesh Jain, MD, TransUnion Cibil. “However, the corrective actions are starting to yield results, with asset quality improving in recent quarters.”

Experts add that private sector banks have consciously moderated issuance in low-margin, high-volume segments, leading to slower volume-driven growth, even as they continue to dominate the premium card segment and fee-based revenue streams.

According to analysis by CARE Ratings, as of September 2025, cards with limits between ₹25,000 and ₹5 lakh account for around 76% of total outstanding balances, while the ₹5 lakh-₹25 lakh segment has steadily expanded to ₹57,443 crore. This trend underlines deeper credit utilization among established customers and supports balance sheet growth, even as average post-GST spend has normalized and there is a steady expansion of the card base.