The number of credit cards issued by the banks stood at 4.84 crore during first two months of this fiscal as against 5.5 crore for the same period during the last fiscal.

Alongside, the credit card payments for the first two months of the current fiscal declined by 15 percent to 4,815 crore in May 2009 from Rs 4,932 crore for April 2009.

The total credit card payments during April and May this fiscal stood at Rs 9,748 crore. As against this, the payments for the same period during last year stood at Rs 11,193 crore.

Analysts have offered multiple reasons for the decline in credit card payments. Primarily, the decline in payments is explained by the economic slowdown, with several sectors of the economy seen to be decline in demand and increased layoffs, salary cuts, and retrenchments.

The economic downturn and increased business risk associated with the credit advances, has made banks more conservative in issuing new credit cards to customers. One of the findings of Indian Cards Council (ICC) revealed downside in credit card business in India, with increase in bad credit to over 20 percent during the current fiscal from the earlier 5-6 percent.

The card issuers have been also toying with card policies. Some of the major revisions like reduction of credit and cash limits on credit cards can be considered to have impacted the payments.

Quoting a bank official on the matter, "The credit card payments are down because the maximum amount limit given by banks could have been reduced."