- India's credit card base grew 10.3% YoY in August, slightly up from July's 10.1%
- Net credit card additions were about 1.2 million, down from 1.3 million in July
- Credit card spending rose 5.9% YoY in August, down from 7.1% growth in July
India's credit card industry continued to see subdued spending growth in August 2026, even as card additions remained relatively steady. HSBC and Jefferies have flagged muted spending momentum, intensifying competition and pressure on profitability as key challenges for the segment.
HSBC noted credit cards-in-force grew 10.3% year-on-year (YoY) in August, compared with 10.1% in July. Net additions stood at around 1.2 million, slightly lower than the 1.3 million added in July. Smaller issuers such as Bank of Baroda, Federal Bank, IDFC First Bank and AU Small Finance Bank continued to gain market share, while larger issuers lost ground.
However, spending growth remained weak. HSBC said credit card spending increased 5.9% YoY in August, while Jefferies estimated growth at 5.5%, down from 7.1% in July. Total spending across merchant networks, including cards and UPI P2M transactions, rose around 19% YoY to Rs 11.3 trillion, highlighting the continued dominance of UPI in digital payments.
Among major issuers, HDFC Bank gained spending share, with HSBC estimating a 137-basis-point monthly increase. Jefferies put HDFC Bank's share at around 30%, up 140 bps MoM. ICICI Bank and Axis Bank, meanwhile, lost or remained broadly stable in spending share.
For SBI Cards, Jefferies highlighted a sharper slowdown. Spending growth fell to 7% YoY from 22% in July, while its spending share declined to 17.5% from 19%. Its card base grew 7.6% YoY, with 0.19 million net additions during August.
HSBC said the upcoming UPI Merchant Discount Rate framework, effective October 15, could narrow the cost gap between UPI and cards. However, with 0.4% MDR applicable to eligible UPI P2M transactions above Rs 2,000, compared with roughly 1-3% for credit cards, HSBC sees only limited competitive relief.
Both brokerages therefore remain cautious on the credit card segment amid muted spending growth, greater competition and margin pressure.
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