Whalesbook
Big Banks Scale Back Card Rewards
India's credit card market is changing as major banks adjust their reward strategies due to rising operational costs. Giants like HDFC Bank, ICICI Bank, and American Express are reducing benefits on their premium cards. This includes removing popular vouchers, setting higher spending requirements for benefits, and changing loyalty point transfer rules. For example, HDFC Bank now requires its Infinia cardholders to spend at least ₹18 lakh annually or keep ₹50 lakh in total relationship value to keep the card's status. These moves show the largest issuers are focusing on cost control and cutting benefits to manage profits.
Challengers Grow Premium Card Offers
While major banks pull back, some mid-tier private and public sector banks are aggressively expanding their premium credit card portfolios. IDFC First Bank, which started its credit card business in 2021, has seen strong demand, with premium cards driving growth towards an estimated 4.5 million cards in force by FY26. The bank's approach is to unbundle premium features, making them available across more card types, including secured cards backed by fixed deposits. IDFC First Bank highlights competitive pricing, no foreign exchange fees, reward points that never expire, and flexible redemption, positioning its cards as strong alternatives to traditional premium products. The bank sees reward points as a direct currency, enabling a more accessible model for affluent customers.
Public Lenders Boost Premium Cards
Public sector banks are also increasing their focus on premium credit cards. BOBCard, part of the Bank of Baroda, is promoting its Eterna and Tiara cards. Ravindra Rai, MD & CEO of BOBCard, reported steady growth in premium card issuances, driven by customer interest. BOBCard has over 31 million cards in force as of February 2026 and issued more than one lakh cards between February and March 2025, its highest monthly figure that year. Rai emphasized a focus on responsible portfolio growth rather than just increasing card numbers, despite the role of short-term offers in driving sign-ups. Punjab National Bank (PNB) launched its metal Luxura card in December, available on RuPay Ekaa and Visa Infinite, and reported over 13,000 issuances between January and March 2026, citing its competitive benefits.
Market Analysis: Balancing Costs and Growth
India's credit card market shows a clear split: established banks prioritize cost control and their existing customers, while challengers actively target new, higher-spending groups. This is happening as overall credit card spending growth slows. While total bank credit grew 14.4% year-on-year in early 2026, credit card spending grew only 6%. Yet, new card issuances are high, with 1.05 million added in February 2026. This indicates banks are focused on adding users while potentially limiting reward use to protect profits. For instance, the BOBCard Eterna offers high rewards (up to 3.75% cashback) on online spending and travel, plus unlimited lounge access for a ₹2,499 fee (waivable with high spending). In contrast, top cards from older banks are restricting such benefits or raising eligibility requirements. HDFC Bank's Infinia, for example, needs ₹18 lakh annual spending to keep its status. This offers customers a chance to get premium benefits without extreme spending, thanks to the challenger banks' growth strategies.
Risks for Card Challengers
While challenger banks' aggressive push into premium cards benefits consumers, it carries risks for the banks themselves. Focusing on flexible benefits like zero foreign exchange fees and never-expiring points can hurt profits if not managed with strong controls and spending discipline. IDFC First Bank's strategy relies on high volumes, which could become an issue if loan defaults rise, particularly with slow credit card spending growth. Public sector banks like BOBCard and PNB must balance acquiring new customers with growing their portfolios responsibly, avoiding a profit-damaging price war. Major banks have a history of devaluing rewards, suggesting challengers' current benefits might not last once market share goals are met. Additionally, evolving regulations could add compliance costs. The rising number of cards per user alongside slower spending growth may indicate market saturation or 'card exhaustion,' intensifying competition for available spending.
Outlook for India's Card Market
India's credit card market is expected to grow, though at a slower rate, with an estimated compound annual growth rate (CAGR) of 7.49% from 2026 to 2034. Innovation is expected to continue, with UPI-linked credit cards and co-branded products becoming more important. Growth is also anticipated from Tier-II and Tier-III cities. The market faces an ongoing balance between banks pursuing profitable growth and customers seeking maximum reward value. The lasting success of challenger banks' premium strategies will hinge on their ability to manage costs, reduce risks, and adapt to changing consumer habits and regulations.