Credit cards are a gateway to other loans
Once an individual comes into the credit ecosystem through credit card, banks find it easier to cross-sell them other loan products.
Two key factors boosted the demand for credit cards and incentivized spending. The first was sales by e-commerce companies. Second, demonetisation in November 2016 had a strong impact on card usage.
According to a report from the credit bureau CRIF High Mark, 65% of the 4.27 crore credit card borrowers (as of September 2019) in India entered the credit ecosystem with a credit card and then graduated to other loans. The remaining 35% or 1.51 crore users already had a credit footprint.