Slowdown in India’s Credit Card Market is Due to Fewer Cards, Not Rising Borrower Risk
The Indian credit card market has been experiencing a slowdown in recent times, with many attributing it to the rising risk of borrowers. However, Bhavesh Jain, CEO of TransUnion CIBIL, has a different perspective on the matter. According to him, the slowdown is not due to riskier borrowers, but rather due to the fewer number of new credit cards being issued.
In an exclusive interview with The Core, Jain highlighted that consumer credit awareness is improving, with over 150 million individuals actively monitoring their credit scores. This is a significant increase compared to the past, indicating that consumers are becoming more aware of the importance of credit scores and are taking steps to maintain a healthy credit profile.
The slowdown in the credit card market is a result of the moderating lending growth post-COVID. The pandemic had led to a surge in demand for credit, as many consumers turned to credit cards to meet their financial needs. However, as the economy has started to recover, the demand for credit has slowed down, leading to a decrease in the number of new credit cards being issued.
Jain attributed the slowdown to the fact that lenders are being more cautious in their lending practices, particularly in the credit card segment. This is due to the increasing risk of borrowers, as many individuals have taken on debt during the pandemic and are struggling to repay their loans. As a result, lenders are being more selective in their lending decisions, leading to a decrease in the number of new credit cards being issued.
However, Jain emphasized that this does not mean that borrowers are becoming riskier. On the contrary, consumer credit awareness is improving, and borrowers are becoming more responsible in their financial dealings. This is evident from the fact that credit bureau data shows that delinquencies have been declining over the past few years.
The improving credit quality is also reflected in the credit scores of Indian consumers. According to TransUnion CIBIL’s data, the average credit score of Indian consumers has been increasing over the past few years, indicating that consumers are becoming more creditworthy. This is a positive trend, as it suggests that consumers are becoming more responsible in their financial dealings and are less likely to default on their loans.
Jain also highlighted that the credit card market is becoming more competitive, with new players entering the market and traditional players offering more attractive rewards and benefits to customers. This has led to a shift in consumer behavior, with many consumers opting for cashback rewards and other benefits over traditional credit card offers.
The improving credit quality and increasing consumer awareness of credit scores are significant developments in the Indian credit card market. They suggest that consumers are becoming more responsible in their financial dealings and are less likely to default on their loans. This is a positive trend, as it will lead to a more stable and sustainable credit market.
In conclusion, the slowdown in the Indian credit card market is not due to rising borrower risk, but rather due to the fewer number of new credit cards being issued. This is a result of lenders being more cautious in their lending practices, particularly in the credit card segment. However, consumer credit awareness is improving, and borrowers are becoming more responsible in their financial dealings. This is a positive trend, and it will lead to a more stable and sustainable credit market.
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