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Behind India’s Credit Card Spending Surge: Young Borrowers, Rising Defaults

What?

India’s credit card defaults are at a record high in absolute terms–yet lenders and industry experts insist everything is under control. According to the Reserve Bank of India (RBI), non-performing assets (NPAs) in the credit card segment rose by 28.42% over the12-month period ending December 2024, reaching Rs 6,742 crore, up from Rs 5,250 crore the year before.

Still, at around 2.3% of total outstanding dues, the NPA ratio appears well within the comfort zone for most credit card issuers and lenders. But headline numbers rarely tell the full story.

Why?

As The Core reported in 2023, cracks first appeared in digital credit, from buy-now-pay-later (BNPL) loans to UPI-linked RuPay credit cards, prompting the RBI to raise capital requirements for unsecured lending. Experts warn that many young, new-to-credit (NTC) borrowers are being drawn into the system through easy EMI products, co-branded cards, and app-based offers, often without fully understanding the cost of rolling debt.

Zavo, a debt resolution platform, told The Core that 12–13% of its users are only paying the minimum due on their credit cards, signalling early-stage distress. “It snowballs from small amounts into something really big,” one borrower said.

A closer look at borrower behaviour suggests the real risk lies in who is borrowing, how easily credit is being extended, and what happens when repayment capacity slips. The system isn’t flashing red yet, but the early warning signs are hard to ignore.

Does This Affect Me?

Arun, a 37-year-old techie in Bengaluru, paid Rs 2 lakh in interest over six years on a credit card debt of Rs 1.5 lakh–sometimes covering only the minimum due, and sometimes borrowing to pay off older loans. A friend of his in Pune is now repaying Rs 2 lakh in EMIs every month, the same as his income, to service over Rs 40 lakh in unsecured loans.

If you are juggling credit cards, BNPL loans, and payday loans, you’re not alone, but it may cost you more than you think. The real debt trap isn’t loud. It's slow and often silent.

MESSAGE FROM MORNING BREW

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CORE NUMBER

91.4 million tonnes

This was the amount of diesel consumed in India in FY2025, a mere 2% increase from the previous year. Diesel, still heavily used in commercial vehicles such as trucks and other vehicles, is also a reflection of economic growth in the country since it accounts for 40% of oil consumption. However, this also comes at a time when the country is trying to move to renewable energy for its transport. Electric three-wheelers, two-wheelers and even buses for public transport are slowly replacing diesel ones, which were much more polluting. 

—🚢 Export Rush. Indian seafood exporters are gearing up to ship around 40,000 tonnes of shrimp to the US during the 90-day pause of 26% tariff. It’s not just shrimp. Exporters in other sectors are also front-loading shipments, spiking demand for containers, pushing up freight rates. “This period provides certainty, encouraging companies to push for shipments… As demand increases, container space will become tighter… likely driving up rates," Ajay Sahai, chairman of the Federation of Indian Exporters Organisation, told The Core. “However, once the window closes and with China’s exports to the US facing heavy tariffs, we expect the situation to stabilise and rates to normalise,” Sahai added.  

—💎 Diamonds Not Forever? Already struggling with reduced demands and competition with lab-grown diamonds, India’s polished diamonds industry hit a two-decade low. According to industry body, Gems and Jewellery Export Promotion Council cut and polished diamond exports fell 16.8% in FY2025 to $13.3 billion year-on-year. This is due to reduced demand from US and China. The overall gem and jewellery exports also reduced by 11.7% to $28.5 billion, the lowest in four years. And there are unlikely to be any chances of recovery. As an exporter told Reuters, the chaos, thanks to US tariffs, has “shaken buyer confidence”.

—🏠 Uneven Floors In Real Estate Affordable housing inventory in India’s top cities fell 19% year-on-year to 1.13 lakh units in Q1 2025, led by a slowdown in new launches, The Economic Times reported. Bengaluru and Chennai saw the sharpest drops in affordable housing units, while Hyderabad bucked the trend with a 9% rise. Meanwhile, luxury houses of above Rs 1.5 crore witnessed their unsold stock surging to 24% quarter-on-quarter, matching the affordable housing supply at 1.13 lakh units. As The Core reported, this boom has squeezed smaller developers, with branded players increasingly dominating the high-end market amid rising land prices and tighter financing.

— 🇪🇺🇷🇺 Russian Oil Back in the Game? A Reuters report says that European business leaders are reconsidering buying oil from Russia, including from the Russian state-owned Gazprom, after US President Trump’s latest tariff drama. Before the Russia-Ukraine war of 2022, countries like Germany obtained most of their oil from Russia, but stopped because of US sanctions on Russia. Instead, Europe imported more LNG from the US. India, on the other hand, continued buying oil from Russia and even expanded its refining capacity and refined oil exports significantly since 2022. In February, Indian officials publicly stated that they’d continue to buy Russian oil only as long as it is sanction-compliant.

PODCAST

On Episode 557 of The Core Report, financial journalist Govindraj Ethiraj talks to Karan Taurani, SVP-Research Analyst (Media, Consumer Discretionary, and Internet) at Elara Capital as well as Poorvi Chothani, Founder and Managing Partner at LawQuest.

• Markets digest fresh round of tariff volatility

• Goldman Sachs sets gold for $4,000 in a year

• OPEC cuts global oil demand growth targets. Why

• The big changes in India’s advertising landscape

• US bound, why you should pay careful attention to what this immigration lawyer is saying?

• India has only one airport in Global Top 50 at 32

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas