Rising Credit Card Defaults in India Reflect Pandemic Struggles
Understanding the Rising Credit Card Default Crisis
The credit card pandemic in India has led to an unsettling surge in defaults, particularly among youthful borrowers influenced by BNPL schemes.
The Alarming Statistics
- Defaults have risen sharply to 1.8% in the first half of 2024.
- Outstanding credit card dues reached an unprecedented Rs 2.7 lakh crore.
These statistics are more than just numbers; they indicate a growing financial crisis that is particularly affecting millennials and Gen Z.
How Young Borrowers are Affected
- Convenience of EMI and BNPL schemes encourages overspending.
- Most young borrowers are maxing out their limits without a plan to repay.
RBI's Measures Amid Growing Concerns
Despite the RBI’s intervention to increase risk weights on unsecured consumer credit, defaults continue to escalate.
- Credit growth in unsecured segments dropped to 15% after the measures.
- However, spending on credit cards reached a record high, indicating deep-seated issues.
Is a Credit Card Crisis Inevitable?
The credit card pandemic signals a shift in consumer behavior, risking an economic crisis unless significant reforms are put in place.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.