SBI Card to Offer “Financial Difficulty Package”
State Bank of India’s credit card unit SBI Card is to roll out a “financial difficulty package”. The scheme is aimed at customers who have a decent repayment record but have recently defaulted due to financial difficulties.
SBI Card CEO Diwakar Gupta said in a statement issued by the lender “We are planning to roll out a package which would include enhancement of the loan tenure and a downward revision of interest rates”.
SBI Cards currently charges monthly interest rates of between 3.1 to 3.35 per cent. Revised interest charges for defaulting card holders would be around 2.5 per cent. Mr. Gupta said that SBI Card was at par with industry default rates.
A common theme over the last couple of years has emerged in the Indian unsecured lending segment, where lenders anxious to obtain market share, have compromised on credit quality. When it becomes clear that such practices impair profits, banks scale back their efforts and suddenly rediscover prudence. Though that has largely been the domain of private sector banks and foreign lenders.
This latest announcement goes to show that even the most innovative state owned lenders are not immune, and feel the need to implement policy or develop products which mitigate the risk of defaults on their unsecured portfolio.
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