{
  "id": 5206319,
  "title": "'Revolver' misfire hits credit card issuers: India's credit card boom sees lower bank profits",
  "url": "https://urgent.news/2026/09/02/revolver-misfire-hits-credit-card-issuers-indias-credit-card-boom",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-02T19:50:36.000Z",
  "source": {
    "name": "The Economic Times - Top News",
    "slug": "the-economic-times-top-news",
    "url": "https://economictimes.indiatimes.com/markets/stocks/news/revolver-misfire-hits-credit-card-issuers-indias-credit-card-boom-sees-lower-bank-profits/articleshow/133722593.cms"
  },
  "original_language": "en",
  "account": "Mumbai: As India's credit card boom continues, issuers are facing declining profit margins, despite a surge in spending. The shift in consumer behavior, with customers increasingly using credit cards for payments instead of borrowing, is reducing the interest-bearing balances that previously contributed significantly to card profits. According to industry estimates, interest-bearing card balances, including revolving debt and Equated Monthly Installments (EMIs), have dropped to around 11% of annual card spending, down from approximately 21% a few years ago, even as card usage has grown at near 27% annually between 2021-22 and 2025-26. Pranav Gundlapalle, a senior research analyst at Bernstein, suggests that the traditional credit card model, reliant on interest-earning assets, is experiencing structural disruption. The decline in interest-earning assets compared to spending is squeezing margins, and cheaper, more convenient alternatives have diminished demand for revolving balances. The ratio of revolving balances to card spending has fallen significantly, from around 7% in 2019 to about 2.8% in the June quarter of 2025, indicating a sharp drop in profit per rupee spent on cards. Large banks, too, are feeling the impact. HDFC Bank's overall portfolio yield has decreased by approximately 50-60 basis points due to the reduced interest-bearing credit-card advances, contributing to the lender's weaker yield performance compared to its peers and the broader banking sector. HDFC Bank's credit card advances-to-spending ratio has also dropped to about 17% from around 27% in 2018-19, mainly because of the decline in revolving and EMI balances. SBI Cards, India's largest standalone credit-card issuer, reported a 14% year-on-year increase in retail spending on its cards, reaching ₹94,033 crore in the June quarter, while receivables grew by only 3% to ₹58,269 crore. Interest income, however, declined by about 3%, reaching ₹2,421 crore year-on-year. While SBI Cards expects revolving balances to stabilize, management noted that the downward trend in interest income may have bottomed out. The company is also exploring EMI conversions to boost interest-earning assets. Revolvers made up about 40% of SBI Cards' receivables in March 2020, down from 22% in the same period a year earlier, with interest-earning receivables falling from 60% to 55% over the same period, even as card usage continues to increase. Bernstein predicts that the profit generated per unit of card spending will decline further to around 0.43% by 2028-29.",
  "summary": "Credit card profits are shrinking for Indian banks as spending rises. Customers now use cards more for payments than borrowing, reducing interest income. Interest-bearing balances have significantly fallen as a percentage of total card spending. This trend is impacting major lenders like HDFC Bank and SBI Cards. Analysts predict further profit margin declines in the coming years.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}