Credit-card debt can sneak up on a customer rather swiftly. This is why the category of users called ‘revolvers’ exists universally, and is loved universally. By paying over 40% interest rate, revolvers in India contribute the most to the card issuers’ profits. About 30% of users accounting for most of a credit-card issuer's interest income—it was evident this business was too good to last forever. The first signs became apparent with the onset of the pandemic, which reduced the avenues to splurge. Now, it’s showing a sustained decline. It’s visible starkly in the SBI Card’s receivables. The country’s only standalone credit-card issuer—also the second-largest by the number of cards issued—did not see the business bounce back once the pandemic receded. Receivables from revolvers dropped to 24% in the quarter ended December 2022, from 27% in the same quarter a year ago. It was as high as 40% in 2020.
There’s a distinct shift underway in consumer behaviour. A host of factors are causing this. “This market of revolving will not be there for very long…” Vijay Jasuja, former managing director and CEO of SBI Card
Issuers earning obscene amounts of money from revolvers and the latter accounting for as much as 90% of credit-card non-performing assets was perhaps an imbalance that needed correction anyway. How lenders are adjusting to the new reality, what new steps they are taking, and why it was bound to happen gradually. There’s a ‘joker in the pack’ that expedited all this. Between the hacks of consumers and banks, and a likely regulatory intervention, the credit card’s revolving business is gyrating to a new credit reality.
