ICICI Bank Issues Clarification They are Financially Sound
The Indian banking sector has remained relatively insulated from the global credit crisis and has seen mark-to-market losses of around Rs 400 Crore or US$100 Million due to investments in instruments of troubled US financial giants Lehman Brothers, AIG, Washington Mutual or Wachovia. About 75 per cent of this is borne by ICICI Bank alone. ICICI Bank has an estimated Mark to Market loss of Rs 309 crore or about a US$70 Million loss, according to a senior Finance Ministry official.
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Frantic Growth in the number of Indian Dollar Millionaires
The Wealth Management or Private Banking unit of Merrill Lynch and consultancy Cap Gemini remain bullish on the growth prospects of India’s wealthy. India has the fastest growing number of High Net Worth Individuals (HNI’s) as they are know in the industry. Rising 22% in 2007, the number of Indian dollar millionaires grew to 123,000 according to the Annual Wealth Report generated by the two companies. Last year fueled by high economic growth rates and soaring stock market valuations, the combined wealth of India’s HNI’s rose by 25.7% to US$440 Billion.
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RBI report on Credit Card Use in India
The RBI (Reserve Bank of India) released a report at the beginning of the month detailing credit card and debit card use in India. There has been a substantial increase in the use of both these types of cards to make payments. The RBI estimates that the value of India credit card and debit card transactions increased by over 42% in the year 2007-2008. The total value of transactions for the time period being studied stood at Rs 72,000 Crores, which in US Dollars works out to a little over US$ 15.6 Billion.
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Tata Has Option To Buy Out AIG
Tata & Sons could decide to exercise its option to buy out the remaining 26% stake it does not already own in its insurance joint venture Tata AIG from its joint venture partner AIG. Currently Tata is the majority partner and owns 74% of the company, this could increase to 100% if AIG decides to sell its stake and the joint venture company would then become a wholly owned subsidiary. Tata & Sons so far have refused to comment on the possibility.
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Tata AIG Customers Have No Reason to Worry
Tata AIG policy holders have zero cause for concern and all obligations that company has outstanding can and will be honored. The two joint venture companies, Tata AIG Life and Tata AIG General Insurance are both fundamentally sound, well capitalised and have no exposure to the global credit contagion. Both The companies are a 74% to 26% joint venture between Tata & Sons which has deep pockets of its own to begin with and AIG. “Currently, Tata AIG Life’s capital stands at $293 million and the company’s solvency margin is 304% against the IRDA’s stipulation of 150%” the company said. IRDA is the Indian Insurance regulator and by their standards the company is very solvent.
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RBI asks Banks to Detail Services Charges and Interest Rates on Websites
The Reserve Bank of India (RBI) India’s Central Bank and banking regulator issued a notification to banks on September 12th. The notification requires banks to use the format devised by the RBI when displaying interest rates and service charges relating to loans. The move is designed so that consumers are able to discern costs at a glance and charges are more transparent.
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Banking in India, Past, Present and Future
Banking - Back in the day
In India, retail banking is still at a very nascent stage. In fact retail banking as we know it, i.e. a customer centric organisation based on personal banking facilities, has been around for less than 2 decades. The Congress government, led by Indira Gandhi in 1969 nationalised the 14 largest commercial banks in India and a further 8 were nationalised in 1980. India had been trending towards a socialist mixed economy since India achieved independence from Britain. For whatever reasons they had, the founding fathers of this country, in particular India’s first prime minister, Jawaharlal Nehru felt that the government knew better than its own people. The then and subsequent Congress led governments of India embarked on an ambitious regime of intervention, regulation and ultimately nationalisation. They devised a complex system of licenses granted by the government simply to do business known as the infamous “license Raj”. A system which was completely disastrous for the country’s economy, and from which it will never ever truly recover. Empowering bureaucrat’s rather than entrepreneurs, stifling innovation and instead rewarding inefficiency, resulting in widespread corruption.
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Supreme Court Keeps Credit Card Interest Rates on Hold
The Supreme Court of India has deferred making a decision on invalidating the directive made by a National Consumer Forum, that Credit Card annual rates of Interest may not exceed 30% per annum for defaulting or late paying borrowers. This is obviously welcome respite for borrowers who in some instances were being charged up to 49% annually. Multinational Banks such as HSBC, Citibank and American Express bank had petitioned the Supreme Court for a stay on the directive, challenging the order given by the National Consumer Disputes Redressal Commission back in July 2007.
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HDFC Internet Banking and ATM system Crashes
HDFC customers woke up to a nasty shock on Tuesday 2nd September, when internet-banking services were disabled and customers could not withdraw funds from ATM machines. When contacted for a statement, an HDFC representative cryptically said the following “HDFC Bank today experienced a technical problem in one of its system applications catering to its retail customers, affecting certain services”. Asked whether any other services had been disrupted, the HDFC spokesperson Neeraj Jha, Head, Corporate Communications added “The bank’s other systems like Corporate Banking, Depository, Treasury, Credit Cards etc. functioned normally. The bank is working to resolve the problem and expects resumption of full services shortly”.
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ICICI Bank Credit Cards Introduce No Annual Fees on Selected Cards
ICICI Bank India’s largest privately owned listed bank recently announced that itno longer charges its credit card holders an annual fee for any of its pure play card offerings. ICICI Bank announced this change at the beginning of August, effectively eliminating annual fees for all ICICI Bank credit cards holders including existing ICICI Bank Credit Card holders retroactively. Not all cards have this benefit. All ICICI Bank Credit card holders can take advantage, but those holding co-branded ICICI Bank Credit Cards that have been issued jointly with airlines will still be required to pay the annual fee.
ICICI Bank is an innovator in the Indian credit card space offering ground breaking India specific products and now has more credit cards issued in India than any other financial institution in the country, offering the following services through ICICI Bank :
- auto debit
- bills payments
- travel services
- hospitalisation benefits
- balance transfer
- EMI-on-call
- dial-a-draft and
- credit limit enhancements