Macroeconomic Determinants of Credit Card Growth in India: Evidence from the Post-Pandemic Period (2020–2025)

Abstract

Credit cards have become an integral component of India's retail payment ecosystem, with their adoption accelerating significantly following the COVID-19 pandemic as consumers increasingly embraced digital payment methods. Against this backdrop, the present study investigates the key factors that contributed to the growth of credit card usage in India during the period from 2020 to 2025. The analysis is based on 72 months of secondary data obtained from the Reserve Bank of India (RBI) and employs descriptive statistics, multiple regression analysis, and structural break tests to evaluate the influence of four major macroeconomic variables: Gross Domestic Product (GDP), the RBI repo rate, inflation, and the value of digital payment transactions.

The empirical findings initially suggest that GDP growth, the repo rate, and digital payment value have a positive association with the expansion of credit card usage, whereas inflation exhibits only a marginal influence. However, a more detailed examination of the data reveals that the impact of these variables is not uniform across the study period. In particular, the relationship between the repo rate and credit card growth appears to be time-dependent. While higher interest rates were associated with credit card expansion during the monetary tightening phase of 2022–2023, this relationship weakened considerably once interest rates stabilized, despite continued growth in overall credit within the economy. In contrast, digital payment value remained a consistently strong determinant throughout the study period, highlighting the increasing importance of digital payment infrastructure in driving credit card adoption.

The study concludes that although macroeconomic variables play a significant role in influencing credit card growth, their effects vary across different phases of the economic cycle. Among the variables examined, digital payment adoption emerged as the most stable and influential driver of sustained credit card growth. These findings provide valuable insights for policymakers, financial institutions, and banking practitioners by demonstrating that the continued expansion of digital payment ecosystems is likely to play a central role in shaping consumer credit behaviour and supporting the long-term growth of the credit card market in India.