What Percentage of Indians Have a Credit Card?

As of 2023, approximately 4-5% of the Indian population held a credit card. This statistic reflects the growing but still relatively low penetration of credit cards in India when compared to other countries. Factors contributing to this include the popularity of alternative payment methods like digital wallets and the increasing emphasis on financial inclusion. Nevertheless, the trend in credit card usage is on the rise, driven by governmental initiatives and the increasing digitalization of financial services.

Current Landscape of Credit and Debit Cards in India

The landscape of credit and debit cards in India has undergone significant changes in recent years. As of August 2016, there were 26.3 million credit cards and a staggering 712 million debit cards in circulation. Clearly, debit cards are far more popular, especially among the general population.

Credit cards are predominantly owned by corporate and formal sector individuals. In contrast, debit cards are widely used across the socio-economic spectrum, from college and university students, government employees, to daily wage earners. Notably, many debit cards, particularly in semi-urban and rural areas, are primarily used for cash withdrawals from ATMs. The present government's efforts to promote cashless payments through Point of Sale (POS) terminals are expected to significantly boost the number of cardholders in the near future.

Historical Trends and Cultural Context

The data from 2013 shows that the number of credit card holders was only 19 million, compared to 350 million debit card holders. By 2015, the total count of both credit and debit cards had crossed 500 million, indicating a significant rise in the number of credit card holders. The question arises: why are there so many debit cards as compared to credit cards? The cultural and economic differences between India and Western countries explain the discrepancy.

In Western countries, particularly the United States, the average person might have 4-5 credit cards to a single debit card. This is often driven by the convenience and the numerous offers and perks associated with credit cards. In the U.S., even small stores offer their own branded credit cards, and many people prefer to use credit cards for spending and view debt as less scary. However, in India, the concept of debt is very intimidating due to cultural and religious beliefs that emphasize savings and planning for the future.

Key Reasons for Low Credit Card Adoption in India

Several key reasons explain the low adoption of credit cards in India:

Scarcity of Credit Card Offers: The availability of credit cards is relatively low, and not everyone has the opportunity to apply or access them.

Cultural Resistance to Debt: The term 'debt' is perceived negatively in Indian culture. People are more comfortable with savings than incurring debt.

High Interest Rates and Penalties for Late Payments: Paying late on a credit card can result in high interest charges, which are often unacceptable in Indian society.

Lack of Awareness: Credit cards are still not well understood by a significant portion of the population, leading to a reluctance to use them.

Despite these challenges, credit cards offer several advantages over debit cards. For instance, they are generally safer, as payments made via credit cards are protected against fraud and theft. In contrast, debit card transactions directly debit funds from your account, leaving no buffer for potential issues.

Government Initiatives and Future Outlook

The Indian government has recognized the importance of increasing credit card penetration. Encouraging the use of digital transactions and instilling a culture of credit card usage is a key part of the 'Digital India' mission. Initiatives such as cashless payment methods and the promotion of card-based transactions are expected to lead to a significant increase in the number of credit card holders in the coming years.

In conclusion, while the current percentage of credit card holders in India is relatively low, the trend is poised for growth. This growth is driven by a combination of government initiatives, changing payment habits, and increasing awareness of the benefits of credit card usage.