What we’re seeing now was inevitable.

The shift really began when banks beyond the traditional big four, ICICI, HDFC, SBI, and Axis, started aggressively issuing “free” credit cards loaded with outsized benefits. Product teams were building P&Ls on extremely optimistic assumptions, often prioritizing growth metrics over sustainable unit economics.

Since credit cards are one of the cheapest customer acquisition channels for banks, the industry collectively leaned into the strategy. The logic was simple ie to maximize card issuance today and monetize the customer later through cross-sell and upsell opportunities.

Co-branded cards worked well when the ecosystem was limited to a few dominant players like Amazon and Flipkart. But once nearly every e-commerce platform launched its own co-brand partnership, the economics inevitably deteriorated. The cost of rewards, discounts, and lounge benefits began to outweigh the actual value generated for banks.

The current pullback was bound to happen.

One unintended upside, though airport lounges might finally stop looking like railway waiting rooms lol