Credit card spending jumps 24% in March to Rs 2.19 lakh crore as banks tighten lending

By: Team India Tracker

In FY26, credit card spending rose 11.98% year-on-year to Rs 23.62 lakh crore, up from nearly Rs 21.09 lakh crore in FY25

The credit card spending touched a three-month high in March, offering a revealing snapshot of how urban consumption is holding up even as banks grow more cautious about lending.

According to data from the Reserve Bank of India, credit card spending rose to Rs 2.19 lakh crore in March, up 23.81 per cent month-on-month from Rs 1.77 lakh crore in February, which had been the lowest level of FY26. The jump was driven largely by year-end financial activity, when households and businesses typically accelerate spending before the close of the financial year.

For the full financial year 2025-26, total spending through credit cards rose 11.98 per cent year-on-year to Rs 23.62 lakh crore, compared with nearly Rs 21.09 lakh crore in FY25. The numbers show that while consumption demand remains resilient, the pattern of spending is changing, and banks are becoming far more selective in deciding who gets credit.

The March rise was broad-based. Point-of-sale spending at physical stores increased 16.36 per cent month-on-month to Rs 78,470 crore from Rs 67,435 crore in February. E-commerce payments grew even faster, rising 28.38 per cent to Rs 1.41 trillion from Rs 1.10 lakh crore.

This confirms a familiar post-pandemic trend: digital spending continues to dominate consumer behaviour. Online purchases now account for the larger share of credit card usage, reflecting both convenience and the rapid expansion of India’s app-based retail economy.

Among banks, HDFC Bank remained the largest spender, with card spending rising 29.62 per cent month-on-month to Rs 65,337.7 crore. SBI Card saw spending rise 24.43 per cent to Rs 42,441.83 crore. ICICI Bank posted 19.6 per cent growth to Rs 36,521.88 crore, while Axis Bank recorded a 26.35 per cent rise to Rs 24,909.68 crore.

The increase in March spending is not unusual. Final-quarter payments often rise because of advance tax payments, travel bookings, insurance premiums, school fees, business settlements and other annual financial commitments. But the broader annual growth also signals that credit cards are becoming a larger part of India’s consumption economy.

That matters because private consumption remains the single biggest driver of India’s GDP growth. When households continue spending, sectors from retail and travel to hospitality and e-commerce benefit. Strong card usage therefore often acts as a proxy for urban demand and middle-class confidence.

Yet beneath the strong spending numbers lies a note of caution.

Credit card additions rose only 0.79 per cent month-on-month to 11.86 crore from 11.77 crore. On a yearly basis, the increase was 7.96 per cent from 10.98 crore in March 2025. That growth is modest compared with the sharp expansion seen in earlier years.

The slowdown reflects rising concern over delinquencies — customers delaying or missing repayments. As defaults increase, banks are becoming more conservative. Issuers are tightening approvals, reducing reward benefits and focusing on safer customer segments rather than chasing aggressive expansion.

Private banks, especially, are now growing their card business in what analysts describe as a “risk-calibrated” manner. Instead of mass issuance, they are increasingly cross-selling credit cards to existing home loan or salary account customers, where repayment behaviour is easier to track.

Interestingly, public-sector banks have increased their market share in spending during FY26. This suggests a gradual shift in competition, even though private lenders still dominate premium and high-spending customer segments.

This trend reflects a larger change in Indian banking. The easy-credit phase that followed the pandemic is giving way to stricter underwriting as regulators and lenders worry about unsecured retail loans. Credit cards, personal loans and buy-now-pay-later products have all come under closer scrutiny.

For the economy, this creates a delicate balance. Consumption needs credit support, but excessive lending without repayment discipline can create financial stress. India’s challenge is to maintain spending momentum without allowing household debt to become a hidden risk.

March’s Rs 2.19 lakh crore spending surge shows that consumers are still willing to spend, especially online and at the financial year-end. But slower card additions show banks are no longer willing to lend as freely as before.

That contrast may define India’s consumer economy in FY27: strong demand on one side, tighter credit on the other. How well policymakers and banks manage that balance will determine whether consumption remains a reliable engine of growth.