Credit cards are getting easier to obtain in the present day than they were just a few years ago. Nearly two years into the pandemic that has got the world spooked, credit card use in India seems to have come into its own. The reason for this is a culmination of causes, like the fact that credit card use has become easier than before for purchasing goods and services, both online and offline. Additionally, credit cards offer a contactless payment option, a fact that is appealing in the current circumstances. Hence, the demand for credit cards has increased in India in the past few years.
Changing Economic Landscape
One of the most rapidly growing economies in the world, India has long tried to fill the gap in the sourcing of credit compared to its Western counterparts. Recently, banks and other NBFCs (non-banking financial companies) have had a shift in focus, trying to prompt an interest in the ‘buy now, pay afterward’ category and purchasing products on EMI. Players in the area of Fintech have disrupted markets by introducing novel offerings to customers. Traditionally, India has been a market where debit has been preferred over credit. However, A sea of change has occurred in the last decade, and credit cards have been issued with gusto. Though, the surge in use hasn’t been as robust as it is in other countries that depend on credit for every expense. Nonetheless, the apprehension towards credit seems to be fast disappearing among Indians, especially with millennials and gen Z population.
Credit Card Industry of India
By March 2021, India had 62 million credit cardholders. In 2021, the growth in new credit card issuance was only 7%, mainly due to the pandemic and economic slowdown, but use by those who already had credit cards was high. The economic atmosphere in India is rife with the popularity of credit cards, and banks as well as financial companies, know this. With a growing trend, though slow, in credit card usage, banks want to keep pushing credit card use so that most transactions are executed via plastic. Hence, with a boost from the Government of India to use more credit than cash, banks have started making it easier for customers, with even low creditworthiness, to get credit cards. In the hope that one day, one person out of five families in India will use a credit card.
How Banks Are Easing Up
For a number of years, if customers did not meet the eligibility criteria, banks would deny approval of credit card applications. Moreover, credit card eligibility criteria that had to be fulfilled by customers were stringent, and it was a challenge for most customers to attain a credit card, even if the will to get one was strong. However, ever since demonetization occurred, the Reserve Bank of India has been trying to coax banks to ease their strict policies and get more people hooked on credit card use. Additionally, the Reserve Bank of India has tried to compel banks to offer more rewards and perks to new customers to encourage credit card use. Nonetheless, in a game-changer of a policy, banks are simplifying their criteria to get a credit card, by either lowering their credit-score eligibility or basing eligibility on criteria other than this.
Getting a Credit Card Easily
Customers with low credit scores are being given credit cards based on other criteria, such as any source of income. You can also get a credit card easily by being a co-holder with an individual who meets eligibility criteria (while you may not). Additionally, most banks had a customary minimum income requirement for basic credit cards, whether you were self-employed or salaried. Many banks looking to attract credit card customers have relaxed this minimum requirement. Furthermore, the minimum age to own a credit card is now 18 years, but several banks still have it fixed at 21 years. This varies from bank to bank and card to card.
Banks have made processes simpler, and you can apply for a credit card online with most banks. The application process now involves only a few simple steps, and approval may be given within a day. Other than this, various credit card types exist and choosing one to suit your individual spending habits is easier than before. Thus, banks wish to match, as specifically as possible, the credit card to the distinctive customer.
Credit Cards for the Digital Age
By September 2021, spending on credit cards among Indians jumped by 57% on a YOY basis, according to the data released by the Reserve Bank of India. As economic activity in India improves, this will result in more spending and more credit card applications too. Furthermore, if you have a bank account, you are likely to get an offer with a decent credit limit from your bank.
