Hoping to offset a slow recovery in corporate lending, Indian banks are pushing into credit cards and personal loans, using blanket advertising, cold call campaigns and even sending employees to malls to lure customers. Given the high margins and huge growth potential, India's 20 million credit cards for a population of 1.3 billion amount to just 0.5 percent of total outstanding bank credit. Unsecured personal loans make up just fewer than 4 percent of all loans. The current push is the boldest since before the 2008 financial crisis, with some lenders aiming to increase loan books annually by a third or more, capitalising on Indians' growing appetite for luxuries like holidays abroad.

"For the industry as a whole, since a couple of years ago we've seen a slowdown in corporate lending. So there is a genuine push towards the consumer lending space," said Sumit Bali, a senior executive vice president at Kotak Mahindra Bank Ltd. While home loans continue to make up about half of consumer loans, Bali said there was an "increasing appetite" for credit cards and unsecured lending, with Kotak aiming for up to 35 percent and 45 percent growth, respectively.

"If an unsecured portfolio goes bad, then it can wipe out your profits pretty fast which is what most of the people saw when it happened (after the financial crisis)," said Harjeet Toor, head of retail assets and small business lending at RBL. Currently, across the industry, 3 to 5 percent of credit card loans and 2 to 3 percent of personal loans go bad, mostly below the sector's overall bad loans ratio of 4.5 percent, he added.

Axis Bank Ltd has already increased the share of unsecured loans to 9 percent of its retail arm from 6 percent, retail lending head Jairam Sridharan said. He aims to increase that to 15 percent in three years. Housing loans, he says, are stable and less risky but returns are also lower. "We'd like to balance that out," Sridharan said.

Soubhik Mukherjee, a 29-year-old marketing professional in Delhi, said he had resisted credit card offers but yielded ahead of a visit to Thailand, his first trip abroad. "My bank told me at the last minute that my debit card will not work everywhere in Thailand," he said, adding that getting the credit card had been "surprisingly easy".

Many Indians have no credit history, millions have never borrowed from a bank and own phones that are prepaid. Most transactions are done in cash or with one of India's 500 million debit cards, a number boosted by government efforts to improve access to financial services.

By Premji