Borrowers delay credit card payments as credit-binge starts to bite

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Subscribe to enjoy similar stories. Mumbai: Indians are delaying repayments on credit cards and personal loans, leading to a rise in delinquencies after months of bingeing on small-ticket consumption loans. The volume of credit card dues where repayments are delayed by over 90 days has increased 17 basis points (bps) year-on-year to 1.8% in June, showed data from credit bureau TransUnion Cibil.

While Mint reported in August how in the first quarter of FY25, several lenders saw a sharp spike in bad loans in both personal loans and credit card portfolios, TransUnion Cibil has now given an industry-wide estimate. Analysts said one of the reasons for the rise in credit card delinquencies is because a section of borrowers are exhausting their credit limits but are unable to repay. Also read | Borrowers are coming in droves, and banks are getting desperate “The young millennials are using the entire limit and directly fully defaulting and turning into non-performing asset (NPA) without even revolving the loan…So that’s the nature of defaults that we are seeing here," Suresh Ganapathy, managing director and head of financial services research at Macquarie Capital, wrote in an email accompanying his note to clients on Wednesday.

Credit card customers can be classified into two groups, based on repayment schedules. One group comprises transactors, or those who pay the outstanding amount by the due date. The other is revolvers—customers who pay only a part of their dues on the repayment date, to avoid a default.