Plastic Out, UPI In?

Good Morning. If the latest numbers released by India's central bank, the Reserve Bank of India (RBI), are anything to go by, India's credit card growth is slowing down. However, a notable exception to the slowdown has been the rise of RuPay credit cards on UPI. Could they become the new norm?

In other news, US president Donald Trump says the US will impose a 25% tariff on India even as a trade deal looks elusive. Meanwhile, National Securities Depository Ltd opens to a fully subscribed IPO.

DECODE THE NEWS

India’s Next Credit Boom Might Be on UPI, Not Plastic

What?

India’s credit card market is showing signs of fatigue. According to June 2025 data from the Reserve Bank of India, monthly credit card spending fell to Rs 1.83 lakh crore—a 3% drop from May—and net new credit card additions turned negative for the first time since the pandemic.

Private banks like ICICI, Kotak Mahindra and RBL reported large-scale card deactivations. At the same time, RuPay credit cards on UPI have quietly gained ground, with QR-based low-ticket spending driving up usage frequency.

Why?

Rising delinquencies and repayment stress among new-to-credit and low-limit borrowers, especially Gen Z and millennials, have made banks more cautious. Think360.ai, a data intelligence firm that builds credit risk models for banks and fintechs, reported that credit card NPAs surged 28% year-on-year to Rs 6,742 crore in June. Rollovers spiked, and 90+ day past due accounts hit 3.6%.

Credit ratings firm Crisil also noted a sharp slowdown in card growth, from 19% CAGR (FY20–25) to 8% as of May 2025.

But while traditional credit cards stall, RuPay-on-UPI is thriving. Kiwi—a fintech app that issues digital RuPay credit cards on UPI—says its users average 40 transactions per month, nearly eight times that of regular cardholders. Enabled by static QR codes and used mostly offline, RuPay-on-UPI now accounts for an estimated 10% of monthly credit card spending.

What Are The Implications?

This shift could redefine how India uses credit. Kiwi’s focus on credit-active users, with Rs 1 lakh+ limits and strong repayment histories, mirrors a larger trend: banks are now chasing borrower quality, not just volume. Subprime originations have fallen sharply, while prime borrowers (CIBIL scores above 731) now dominate new issuances.

The concern? Credit utilisation has hit 48%, well above the safe 30% mark. And with QR acceptance points far outnumbering PoS terminals, UPI-linked credit could scale rapidly—if it avoids the pitfalls of past overreach by traditional credit card issuers. As traditional issuers pull back, the battle for quality borrowers is heating up.

CORE NUMBER

13.6 million

That’s how many phone numbers India’s Ministry of Communications has disconnected in their effort to stop telecom fraud, said Union Minister Jyotiraditya M Scindia in the Lok Sabha. In addition to starting a digital intelligence platform, he added that the government has also started Sanchar Saathi, to inform citizens about their telecom initiatives. 

📱 Fast Facts:

• Handsets Blocked by DoT: 5.5 lakh

• Bulk SMS Senders Deactivated: 20,000 

• WhatsApp Accounts Disengaged: 24 lakh

Telecom fraud is a major threat in India — between 2023-24, Indians reported 11.3 lakh financial frauds, of which a major subset were telecom-related. The biggest among these are OTP (one-time password) fraud, SIM swap fraud, and KYC update scams.

FROM THE PERIPHERY

Trump Targets India. A day before the August 1 deadline, US president Trump announced a 25% tariff on Indian goods, citing high tariffs, trade barriers, and India’s continued defence and energy ties with Russia. “Remember, while India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world,” Trump said on Truth Social, his social media platform. Trump also called India’s protectionist policies “obnoxious”.

Context: Trade talks between India and the US have been ongoing for months, but no deal has been finalised. US-India trade was estimated to be worth $129.2 billion in 2024, compared to $975.9 billion worth of trade with the European Union in the same year.

What Next? The Ministry of Commerce & Industry said in a statement that it was studying the implications of Trump’s tariffs. “The Government attaches the utmost importance to protecting and promoting the welfare of our farmers, entrepreneurs, and MSMEs,” the statement read. The statement also reiterated India’s stand on national interest and “concluding a fair, balanced and mutually beneficial bilateral trade agreement”. On Wednesday’s edition, The Core had highlighted why the true significance of the trade deal lies not in its timing, but in the fine print.

Tata Set for Record Buyout. Tata Motors is set to acquire Italian truck maker Iveco for $4.5 billion, in what would be its largest auto acquisition, surpassing its $2.3 billion Jaguar Land Rover deal in 2008, The Economic Times (ET) reported.

Backdrop: Tata Motors' and Iveco’s boards were expected to meet on Wednesday to approve the deal. Iveco’s defence arm will be excluded from the transaction.

Implications: Tata Motors plans to buy 27.1% from Exor, the Agnelli family’s investment firm, and launch a tender offer to acquire full control. The Tata Group is confident of acquiring 100% of Iveco’s core business, according to ET’s sources.

NSDL IPO Fully Booked. National Securities Depository Ltd’s (NSDL) $458 million IPO was fully subscribed within hours of launch on Wednesday, reflecting strong demand amid India’s retail investment boom, Reuters reported.

Backdrop: NSDL holds 86% of India’s depository market. Demat accounts have grown at a 21.9% CAGR since FY14, reaching 192.4 million in March 2025.

Implications: Analysts see NSDL’s IPO valuation (~60x earnings) as attractive relative to Central Depository Services (India) Ltd (CDSL), whose stock surged nearly 12x since 2017. Some expect investor rotation post-listing.

Sanctions Disrupt Oil Trade: Three tankers carrying oil products from India’s Nayara Energy remain undelivered due to new EU sanctions on the Rosneft-backed refiner, Reuters reported. The Alora is anchored off Portugal since July 18; Em Zenith reversed course en route to Malaysia, and Pacific Martina floats near Oman.

Outcome: Despite the cargoes being paid for, EU-linked firms are reluctant to handle them. Nayara, majority-owned by Rosneft, called the sanctions unjustified. It has cut refinery operations due to storage issues, with some ships ending contracts and buyers backing out.

What’s Next? Nayara, calling the sanctions unjustified, has scaled down operations due to storage issues. Some vessel owners have withdrawn, and at least three planned loadings have been cancelled or diverted, according to shipping data.

MESSAGES FROM OUR SPONSORS

PODCAST

On Episode 643 of The Core Report, financial journalist Govindraj Ethiraj talks to Chokkalingam G, Founder at Equinomics Research as well as Vivek Kumar, Economist at QuantEco Research.

• Indian markets are up but they have not changed much in the last year

• India should brace for 25% tariffs on exports to the US

• How India’s IT engineers are unable to keep pace with new technology

• Tata Motors could buy European truck maker Iveco in a $4.5 billion deal

👥 THE TEAM

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