In the wake of rising delinquencies, banks are going slow on credit card sales. Banks do not want to take risk by granting unsecured loans.

The credit card firms have also become wary of payment defaults. The companies now plan to spend higher on cards and repayment ability of its customers. This helps in banks becoming cautious of defaults. Introducing more fee-based credit cards is more logical because people tend to use more than what they pay for them. Rajesh Saxena, CEO, American Express Banking Corp. India, says, "The industry is more focused on fee-based cards as the customers spend more on them."

There have been many credit card defaults lately and some bankers blame this on certain other banks that sold credit cards aggressively without conventional forms of credit appraisals. Shameek bhargava, Managing Director, cards (Asia Pacific), Deusche bank said, "It was targeted at a base of prospective customers who were already holding credit cards of one bank or the other creating over-leveraging of customers."

He said that though banks acquired more customers by offering benefits like waiving off annual charges, issuing an add-on card along with a new card, the customers used the primary cards only thus increasing operating coats of the banks.

Private Banks had been very aggressive in selling credit cards thus forcing the public banks also to start with the same.

Now with the private banks going slow on credit card sales, even government banks have slowed down. Indian Overseas bank is planning to completely exit from this business. "There has been some talk of withdrawing from this business altogether," says a senior official from the bank."

Instead of solely relying on interest-based income, most banks are now trying to increase their fee-based incomes through bancassurance and third party offerings like mutual funds.