Legacy lenders rule credit card spends

MUMBAI: The country's credit card spend is consolidating, with HDFC Bank and State Bank of India moving close to controlling half of total card spending by value, while the top five issuers together have expanded their dominance to 85.6% of transaction value by Jan 2026.

The shift marks a migration of high-value spending towards legacy lenders. At the start of FY26 in April 2025, the top five banks collectively accounted for 81.2% of total credit card transaction value. Within 10 months, their share rose by 4.4 percentage points, leaving smaller banks and fintech issuers competing for less than 15% of industry spending despite continued expansion in card issuance.

The consolidation is being driven overwhelmingly by the top two issuers. HDFC Bank, already the market leader, increased its share of transaction value from 28% in April to 28.4% in Jan. SBI emerged as the biggest gainer of the fiscal year, expanding its share sharply from 19.3% to 24.7%. Together, the two banks absorbed more than five percentage points of market share from competitors, offsetting declines recorded by ICICI Bank and Axis Bank. Kotak Mahindra Bank retained fifth position with a modest increase in share from 3.3% to 3.5%.

The dominance of the top banks has been further reinforced by the drop in the share of foreign banks from 5% to 4.5%. Citi was the most recent foreign bank to exit the credit card business. Some smaller banks that issued credit cards in partnership with fintechs and NBFCs have also faced regulatory restrictions.

Despite the concentration in spending value, the distribution of credit cards remains comparatively stable. The top five banks accounted for 75.2% of active cards in April 2025, slipping marginally to 74.7% by Jan 2026. The divergence between card share and spending share suggests that while smaller lenders continue to expand card issuance, consumers rely disproportionately on cards from the largest banks for high-value purchases such as travel, lifestyle consumption, and major e-commerce transactions.

Jan 2026 data further reinforced this concentration even as overall spending cooled after the year-end festive surge. Total industry credit card spending declined 2.7% month-on-month to nearly Rs 2 lakh crore from close to Rs 2.5 lakh crore in Dec.

Online spending fell 2.5% to Rs 1.23 lakhcrore but retained dominance with a 61.8% share of transaction value, while point-of-sale spending declined 3.2% to Rs 76,000crore, reflecting a sharper drop in offline discretionary consumption.

Even as the total spending pie shrank in Jan, HDFC Bank and SBI increased their combined share. Their joint transaction value fell from Rs 97,127 crore in Dec to Rs 94,544 crore in Jan, a smaller contraction than the industry-wide decline, lifting their combined market share marginally from 47.4% to 47.5%. In Jan alone, HDFC recorded Rs 56,518 crore in credit card payments and SBI recorded Rs 38,026 crore, indicating their near-majority control of industry spending. The consolidation trend was also visible in transaction volumes, with the two banks accounting for 43.9% of total credit card transactions in January.