The credit card industry in India, which has experienced significant growth over the past decade, is now facing a challenging transition. A recent report from TransUnion CIBIL highlights that as millions of consumers increasingly rely on unsecured credit, there are rising levels of delinquencies, heightened borrowing across various loan types, and the emergence of “pockets of stress” that present new challenges for both lenders and borrowers.
Although the market has witnessed a surge in credit card issuances, climbing from 14 million to 52 million over the last ten years, the report indicates that consumers are likely to possess multiple credit cards and unsecured loans. This situation offers both growth and risk management opportunities for card issuers.
Currently, many consumers are juggling numerous credit products, with younger borrowers entering the market exhibiting more assertive borrowing behaviors. Outstanding credit card debt has increased significantly, surpassing Rs 3.1 lakh crore, yet this rapid growth has been matched with a decline in asset quality starting in 2022.
Following a period of improved repayment practices leading up to the pandemic (2016-2020), delinquency rates have begun to rise again as unsecured lending has expanded throughout the financial sector. According to CIBIL, since 2022, delinquencies have increased alongside a stabilization in credit card balances, highlighting emerging stress points within a fast-growing unsecured lending environment.
The report notes that the delinquency rate in the 180 days past due (dpd) category has risen from 5.8% to 8.1% as of March 2026. A significant change in the market is that credit cards no longer function independently; they are now part of a broader ecosystem of unsecured credit. The proportion of open credit cards within the unsecured credit market has dropped, from 56% in 2016 to 38% in 2026.
Credit card issuers are now competing with small personal loans (below Rs 50,000) and loans for consumer goods, as consumers increasingly opt for multiple forms of credit rather than relying solely on credit cards. CIBIL reports that the number of consumers holding multiple credit cards and unsecured products has doubled over the last decade—from 16% to 32%. Furthermore, the percentage of individuals with three or more credit cards has grown from 12% to 22% during the same timeframe.
This overlapping of financial products results in competing repayment responsibilities, complicating lenders’ ability to assess borrower risk based on a single product. Additionally, the emergence of “high exposure users,” who constitute about 10% of cardholders, raises concerns. These individuals tend to have high credit utilization and multiple unsecured loans, making them more susceptible to defaulting on payments.
Data shows that individuals in this high exposure category who have missed two or more payments across various loans are significantly more likely to fall into serious delinquency on their credit cards than other consumers. Delinquency rates worsen as highly leveraged borrowers gain more experience with credit. CIBIL indicates that diversified credit users with over four years of card history experience delinquency rates that are 40 to 60 basis points higher than the average.
Those who have taken on multiple personal loans recently are particularly at risk; 22% of consumers with extensive credit card experience have opened more than three personal loans in the last two years, resulting in an 8.7% delinquency rate among this group. The behavior of younger borrowers also presents a shift, as Gen Z individuals (born between 1995 and 2010) are acquiring unsecured loans at a higher rate than millennials did at the same age.
CIBIL highlights the need for close monitoring of borrowers with consumer durable and high-ticket personal loans, as they face competing financial priorities. Notably, the reliance on credit cards alone for borrowing has declined, with the share of consumers holding only a credit card dropping from 50% to 33% over the last decade. This change indicates a more diversified and complex landscape for credit sources.
Looking ahead, the next phase of growth in the credit card sector will be shaped by a new generation of consumers who are entering the market with more proactive borrowing habits compared to their predecessors. Their early experiences with credit cards, along with their borrowing behaviors and payment priorities, will significantly influence both their long-term value to the financial system and the overall systemic risk.
