“Secured credit cards are well and truly the answer for the tens of millions of underserved seekers of credit,” says Raj Khosla, founder and managing director of MyMoneyMantra.com. “They offer the perfect way to establish a record of financial discipline and build a viable credit history.”
But inclusion doesn’t happen by accident. While many banks are expanding their secured card portfolios, Khosla believes the real push needs to come from policymakers. “All banks have to deliver on Reserve Bank of India (RBI)-mandated targets for priority sector lending (PSL). If banks can also be given targets for issuance of secured credit cards, it would lead to huge financial inclusion, that too without any risk to the issuing banks,” he points out.
Regulation and innovation
This shift towards safer, more disciplined lending is not limited to secured cards. India’s entire fintech-credit system is recalibrating itself in the wake of tighter RBI regulations. From First Loss Default Guarantees (FLDGs) to Buy Now Pay Later (BNPL) schemes and prepaid co-branded cards, the regulator has been putting its foot down on unchecked innovation.
“We are indeed heading towards a more risk-averse ecosystem,” says Khosla. “Given the rapidly declining portfolio quality, which necessarily follows easy lending, the RBI had no option left. A downward spiral is almost unstoppable.”
Still, he argues that regulation is not the enemy of innovation—it’s a necessary counterpart. “Innovation and regulation are the two ends of a tidal wave—one follows the other. It is the regulator’s job to support successful innovation and curb unworkable developments. I feel the RBI is rendering a yeoman service to our nation.”
Premiumisation vs simplification
At first glance, the current credit card market appears to be at a crossroads—on one hand, there is a trend towards premiumisation, with metal cards and concierge services. On the other hand, there’s a clear move to simplify card offerings for new-to-credit customers. But are these forces working against each other?
Khosla doesn’t think so. “The two trends are not contradictory but can be complementary if correctly digested. The world over, premiumisation and simplification go hand in hand in establishing a scalable and inclusive credit card proposition,” he explains.
Consumer behaviour is naturally segmented, he adds. This makes it easier for banks to align card features with actual spending patterns. “Technology inevitably leads to simplifying processes associated with credit card usage and payments. Enhanced inclusiveness is an automatic by-product of simplification.”
Rising costs, stable loyalty?
Meanwhile, cardholders are increasingly feeling the pinch. Interest rates are up, rewards are shrinking, and hidden fees are on the rise. So, where does that leave loyalty and trust?
According to Khosla, “Over the longer term, ups and downs in credit costs do not have any meaningful value on loyalty or trust.” What matters more, he says, is transparency and maturity. “When information levels are near perfect and consumers know their preferences, there is little room for unpleasant surprises.”
This clarity benefits banks too, allowing them to design products that are tightly tailored to real needs. “Banks will never issue credit cards that have unviable off-take,” he adds.
The new face of financial affluence
Perhaps the most overlooked story is the credit card boom beyond metros. As cards spread into tier II and III cities, the very definition of financial affluence is being rewritten. “Banks and fintechs have woken up to the huge spend potential of tier II and III cities,” says Khosla. “Some products are designed to cater for demand in areas beyond the metros.” From personal loans to credit cards, regional aspirations are shaping product design.
The digital familiarity of rural consumers is also surprisingly robust. “Literacy rates have only a marginal impact on rural spending. The consumer is familiar with the emojis and can and does spend in a financially affluent manner,” he adds, suggesting that the traditional indicators of affluence are evolving.
As India’s credit ecosystem matures, a new equilibrium is emerging, one where financial discipline, thoughtful regulation, and targeted innovation can co-exist. Whether it’s through the humble secured card or premium plastic in a small-town wallet, the revolution in India’s credit culture is already underway.
