PSBs gain share in credit card spending

Public sector banks (PSBs) have expanded their share in credit card spending, a segment historically dominated by private sector lenders, fuelled by increased usage among existing cardholders, robust festive demand and greater penetration into salaried customer segments.

The share of PSBs in credit card spending increased 4.5 percentage points year-on-year to 22.2% in December 2025, according to Reserve Bank of India data, driven primarily by large lenders. The share of large PSBs increased 4.52 percentage points to 21.8%, with SBI Cards playing a pivotal role.


“The increase in their (PSBs’) spending market share, largely driven by large PSBs, was supported by higher utilisation of their existing card base—particularly in mass retail categories—seasonal year-end consumption and greater penetration into government-linked and salaried accounts,” said Saurabh Bhalerao, associate director-BFSI Research, CARE Ratings.

“PSBs continued to gain significant share, aided by their wider customer reach in tier-2 and tier-3 cities.” By contrast, private sector banks saw their share decline 3.75 percentage points to 72.5% in December, from 76.3% a year earlier. The fall was largely attributable to small and mid-sized private banks which were calibrating card issuance and credit limit enhancements while tightening underwriting standards, experts said.

According to CARE Ratings, average spending per card for private banks stood at Rs 18,072 in December, down 6% year-on-year, partly due to rapid expansion of the card base. Higher issuances, particularly among newer and mass-market customers, led to lower average utilisation. PSBs, on the other hand, recorded a 27% surge in per-card spending to Rs 16,500, as newer cardholders increased usage.

State-run banks also benefited from the regulator’s decision in late 2022 to allow RuPay credit cards on the Unified Payments Interface (UPI) network. A Bernstein analysis estimates that RuPay credit cards on UPI, the indigenous realtime, mobile-based payment system, now account for about 40% of transaction volume and around 8% of transaction value.

“Issuers such as SBI Cards are witnessing a rapid increase in UPI-lin-ked credit card transactions, mirroring the pattern seen during the early days of UPI’s disruption of debit cards,” said Pranav Gundlapalle, head of India Financials at Bernstein.

As a result, RuPay’s credit card market share has increased sharply to nearly 16% from 3% two years ago.

“We continue to benefit from the UPI-on-credit-card linkage driven by the festive season. UPI and credit card usage gained further momentum, witnessing over 20% quarter-on-quarter growth, largely in department stores, groceries, utilities, fuel, apparel and restaurants,” SBI Cards managing director and CEO Salila Pande said on an earnings call.

Over 50% surge in ecomm
In December last year, online ecommerce credit card transactions increased 9.8% year-on-year. PSBs significantly outperformed, recording a 50.5% surge compared with 2.3% for private lenders, underscoring faster digital adoption and improved customer engagement. Offline transactions expanded at a more moderate pace, with PSBs posting a 16.6% growth versus 5.4% for private sector banks.

Nonetheless, the credit card market remains concentrated, with the top five to eight issuers accounting for more than 80% of total spending, highlighting the dominance of large players with extensive distribution networks and merchant ecosystems that continue to capture a disproportionate share of incremental volume.