RBI Clarifies Corporate Card Reporting

The Reserve Bank of India has issued a directive to standardize the reporting and classification of corporate credit cards under joint liability structures. Effective immediately, overdue reporting and asset classification will apply solely to the corporate entity, regardless of individual cardholder status. This regulatory clarity resolves inconsistencies in how different banks reported these specific credit products.

Bank Benefits: Simpler Operations, Lower Capital Needs

This standardization is expected to simplify operations and reduce capital consumption for financial institutions. By defining these exposures under corporate loan categories, banks may see an improvement in their capital adequacy ratios. Previously, ambiguity sometimes meant banks held higher capital reserves against these assets, impacting their return on equity. A credit card head at a mid-sized bank noted, "This brings needed uniformity and frees up capital that can be deployed more efficiently."

Unsecured Cards Face Growing Pressure

This RBI clarification for corporate cards comes as the broader unsecured credit card sector faces increasing regulatory oversight and market caution. In November 2023, the RBI raised risk weights on unsecured consumer credit, including credit cards, from 125% to 150% due to rising delinquencies. This action has contributed to a sharp slowdown in credit card issuance growth, falling from about 19% year-on-year in March 2024 to 8% year-on-year by March 2025. Major issuers like SBI Cards have lowered their quarterly new card targets to manage portfolio quality.

Sector Valuations and Key Players

Leading Indian banks offering credit card services show varied valuations. As of April 2026, SBI Card's Price-to-Earnings (P/E) ratio was approximately 30.51, positioning it as a growth stock. In contrast, major private banks like HDFC Bank had P/E ratios around 15.93, ICICI Bank at 16.48, and Axis Bank at 16.16, seen more as value stocks. These P/E ratios reflect investor sentiment and future profitability expectations. HDFC Bank leads the market in total income from credit cards, followed by Kotak Mahindra Bank and Axis Bank. ICICI Bank historically reports lower delinquency rates.

Delinquencies Rise, Spending Patterns Shift

Despite a recent surge in credit card spending to ₹2.19 trillion in March 2026, a three-month high from year-end transactions, underlying trends in the unsecured segment are concerning. Overall credit card spending in FY26 grew 11.98% to ₹23.62 trillion. While this is an increase from FY25, the pace moderated compared to prior years. Delinquency rates have risen across categories, with the 91-180 days past due (DPD) rate reaching 2.3%. Reports show credit card NPAs have increased significantly since 2020, reflecting household financial stress. The rate of consumers rolling over unpaid dues, a key source of bank profitability, has also fallen, forcing a strategic shift to transactional income and fee-based revenue.

Challenges Ahead: Margin Pressure and Portfolio Quality

The Indian credit card market faces a correction after years of rapid growth. Rising delinquencies and regulatory actions, such as increased risk weights, are making economics tougher for issuers. The costs of rewards and loyalty programs grow as transaction volumes increase, potentially squeezing profit margins. Tighter underwriting standards and a focus on portfolio quality have also slowed new card issuance. The shift from 'revolver' income (interest on rolled-over balances) to transactional income, especially with credit cards used via UPI for everyday purchases, challenges established profit models. The RBI's focus on financial stability in the unsecured retail segment suggests continued regulatory oversight, posing challenges for aggressive growth strategies.

Outlook for Credit Card Lending

Analysts expect a recalibration of credit card strategies, with issuers focusing on deepening engagement with existing customers and offering differentiated product lines (premium vs. basic). While overall bank credit growth remains robust, credit card segment expansion is expected to be more measured, prioritizing risk-adjusted returns over volume. The market will likely adapt by enhancing personalized offers and digital integration, but sustained profitability depends on managing credit quality and evolving consumer spending patterns.