Credit card usage has surged in India, driven by the rising popularity of digital payments and increased consumer spending. However, there is another worrying side to this trend - a growth in non-performing assets in the segment.
According to the latest data from the Reserve Bank of India, the NPAs in the credit card segment increased 28.42% during 2024. The total amount defaulted by credit card holders stood at Rs 6,742 crore during the period.
The gross NPAs increased by nearly Rs 1,500 crore from Rs 5,250 crore in December 2023, The Indian Express reported, citing the RBI data.
According to the central bank's data, NPAs in the credit card segment accounted for 2.3% of the gross loan outstanding of Rs 2.92 lakh crore in December 2024, as per the report. In the previous year, the same stood at 2.06% of Rs 2.53 lakh crore outstanding loan.
The report added that the credit card NPAs have surged over 500% compared to Rs 1,108 crore in December 2020. On the other hand, overall gross NPAs in banks decreased from Rs 5 lakh crore in December 2023 to Rs 4.55 lakh crore by December 2024. The findings were based on a reply to an RTI query.
In technical terms, card outstanding refers to the total amount that a customer owes on their credit card after the interest-free period provided by the bank has ended. This carries higher interest rates. If the customer delays repayment for more than 90 days, it becomes a non-performing asset for the bank. The interest rates on outstanding dues can range from 42-46% annually and can also lead to a decline in credit score.
Meanwhile, credit card transactions increased to Rs 18.31 lakh crore during the financial year ended March 2024, marking a three times increase compared to Rs 6.3 lakh crore in March 2021.
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