Credit Card Growth Slows Sharply In FY26 Q2 As New Credit Card Issuance Falls By 28%

The Indian credit card market has recorded a significant slowdown during the second quarter of FY26, with a considerable decline in the issuance of new cards, as consumer credit growth eased. As per a report by JM Financial Institutional Securities, a total of 4.4 million new credit cards were issued by banks, showing a sharp decline of 28 per cent on a year-over-year basis compared to 6.1 million cards issued a year ago.

Consequently, card numbers in circulation showed a low rate of growth of 6 per cent on a year-on-year basis, indicating a moderation in demand for retail credit.

Slower Growth in Credit Card Balances

The slowdown was also apparent in outstanding balances on credit cards. The growth in balances moderated to 9 per cent in the second quarter of FY26 from 20 per cent in FY25. This slowdown was mainly due to lower trends in new card issuing and a somewhat cautious environment in terms of lending.

This cooling in balances indicates that, while existing customers are continuing to spend, the rate of growth of the total credit card base has slowed down from what it was in the previous year.

Private Banks Enhance Grip Over New Cards

Despite the slowdown in growth, the private sector banks maintained their lead in the market share of the credit card business. Almost 78 per cent of the new credit cards issued in FY26 Q2 belonged to private banks, according to the report. Private banks saw an increase of 730 basis points in market share from the levels of FY25.

On the other hand, non-banking financial companies (NBFCs) and other entities continued losing market share in new card issues. The data reflected that private banks are the major contributors to the growth of the credit card industry, despite the overall market growth at a slower pace.

Asset Quality: Indicators Display Mixed Tendencies

Asset quality indicators had a mixed quarter. Late-stage delinquencies, measured by payments over 90 days due, subsided to 8.9 per cent in the second quarter of FY26. Notably, it improved from the peak seen in FY25, which was 15 per cent.

Early-stage delinquent loans also started showing signs of stabilisation, although there has been an increase in mid-stage delinquencies for private banks, thereby implying that credit stress has not been completely alleviated.

Changes in Charge Card Spending Shares

As far as the current spends are concerned, select card issuers have been increasing in popularity. As per the Reserve Bank of India (RBI) data cited in the report, the market share in credit card spends has improved for SBI Cards and HDFC Bank by 172 basis points and 96 basis points in FY26 so far, respectively.

Other card issuers, such as ICICI Bank, Kotak Mahindra Bank, RBL Bank, and IndusInd Bank, also slid back in market share during the same period.

PSBs Share of Other Retail Loans Increases

Although private sector banks had improved their presence in credit cards, the public sector banks also had an increasing market presence in the major segments of retail lending, including personal, home, and car loans. As per the report, the PSBs had improved their market share in the disbursement of unsecured as well as secured loans. This trend was supported by an increase in the average ticket size, improvements in asset quality, coupled with a moderation in loan growth in the first half and second quarter of FY26.

In terms of disbursements, the PSBs have made progress in personal, home, and auto loans, which point towards an apparent divergence in the credit card segment and other retail loan products.