When he got back to the bank, the helpdesk couldn’t give him much justification for the cut in his credit limit. “A representative just told me that the bank had been doing this to a lot of customers lately, though it wasn’t clear why,” Sharma told The Indian Express. He claimed to have a fairly clean credit history on it. About a fortnight later, Sharma got an e-mail from Barclays saying “the bank reserves the right to revise a customer’s credit limit but that same is not necessarily an indicator of your financial standing… request you to contact us after six months for us to review your card account limit enhancement.”

Sharma is not alone to wake up to the real credit crunch hitting the Indian bourgeois. Credit card subscription grew at a phenomenal 40 per cent on an average over the last four years. There are as many as 25 million credit card holders in India and the numbers had grown at a phenomenal 40 per cent a year over the last four years with India maintaining a healthy growth rate of 9 per cent plus.

Banks, both private and state-owned lent aggressively to retail customers encouraged more by a falling interest rate scenario. But with the global financial crisis and a squeeze on domestic liquidity, most banks, including the country’s largest private bank ICICI Bank have consciously started tempering down their retail operations. Fearing defaults, they have become more cautious on all kinds of consumer finance and retail loans, especially two-wheelers, personal and credit card loans.

Sure enough, incessant calls from bank executives and direct selling agencies pestering you for a new credit card or to have the credit limit on your existing card raised have almost ceased.

No longer do you find yourself being asked to fill out a credit card invoice form at the petrol pump so they can charge it to your card. In case you are planning a shopping trip abroad, your bank may not be too comfortable with the idea. Manhattan Bank is sending out warning e-mails to all its users asking them to inform them about any plans of going abroad and using their credit card there beforehand.

A bank executive told The Indian Express that they are conducting thorough bi-annual reviews of the credit history of their card users and are diligently revising downwards the credit limits of those with even slightly problematic histories. Many bankers admitted they have become more cautious while giving out personal loans.

According to the Reserve Bank of India, the number of credit cards circulating in the country fell by about 1.5 million in the first five months of the current financial year to 26.73 million. Credit card debt, however, does not account for a significant percentage of total bank credit in the economy (just over 1 per cent). But in light of the current crisis, bankers believe they have no option but to resort to such penny pinching.