The still relatively small credit card industry in India has been in adjustment for the past two years, as rising default on personal loans has caused lenders to tighten their lending control. As a result, the number of credit cards in circulation has been steadily decreasing as banks close out delinquent and inactive cards.
The number of active credit cards in India has steadily dropped from a peak of 2.75 crore as on March 2008 to 1.88 crore in March 2010. Since then it has declined to 1.82 crore as on November 2010.
According to bankers, the shrinkage is because of a clean-up of the credit card portfolio by banks.
Although card numbers have shrunk dramatically, spending on credit cards has been steadily increasing.
At the same time, debit cards have gained popularity in India as consumers seek more control of their spending as well. The number of purchase transactions on debit cards has been quickly growing and is expected to bypass that for credit cards this year or in 2012. Credit cards still have obvious lead over debit cards in terms of purchase volume.