ICICI Bank Becoming More Selective with New Credit Card Customers
ICICI Bank India’s second largest bank and the country’s largest credit card issuer has decided to ease up on the growth of its credit card business following in the same footsteps of Standard Chartered Bank as was reported here a couple of weeks ago. In fact seeking better quality clients that are more likely to repay their obligations has been a long running theme within Indian retail banking over the last few months, as the rush to grab market share at any cost including compromising on credit quality has clearly not paid off.
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Indian Credit and Debit Card Use to Explode
Indian electronic payments or e-payments for retail purchases has grown by 60% in the last 3 years and is set to grow by a further 70% in the next two years, according to a report by research and consulting firm Celent. The value of retail e-payments reach between US$ 150 Billion to 180 Billion (Rs 750,000 Crore to Rs 900,000 Crore) by 2010.
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Anil Ambani and Prudential, Both Eyeing up AIG’s South East Asian Operations
Anil Ambani’s Reliance ADAG is thought to be interested in AIG’s Asian life insurance business, the Economic Times reported last Monday. The deal which would exclude AIG’s Indian business, Tata AIG which is a joint venture with Tata & Sons, would result in Reliance becoming the largest life insurer in Asia. Reliance is not the only one thought to be considering bidding for AIG’s Asian assets, with Prudential also rumoured to be very keen.
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HDFC’s Mortgage Book Actually Growing
HDFC, the largest mortgage lender in India reported second quarter net profits on Friday. The company said that it’s net profit increased by 34.2% excluding onetime gains from the stake sale of BPO firm, Intelenet Global in the same quarter last year. The company’s profit in this quarter, last year was Rs 646.39 Crore (US$ 131 Million), which included a Rs 313.25 Crore (US$ 64 Million) gain from selling its stake in its BPO joint venture with Barclays, to a management buyout financed by the Blackstone Group.
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ICICI Bank a Great Buy Right Now
Even before rumour mongering took hold of the Indian equity markets at the beginning of October, ICICI Bank, India’s largest private sector lender had already taken a beating, down some 56% from the start of the year when the Sensex hit its all time highs. Rumours of ICICI Bank’s exposure to Lehman Brothers and the questioning of its financial health began circulating through anonymous emails and text messages. That was enough to prompt a run on a few of the bank’s branches in the southern city of Hyderabad.
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ICICI Bank launches new Co Branded card with BA
ICICI Bank, India’s largest private sector bank and British Airways have teamed up to launch a co-branded ICICI Bank credit card. The card certainly has a bit of a long winded title - ICICI Bank British Airways American Express Credit Card, but it looks like it could be a winner for anyone looking for travel rewards.
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Credit Card Interest Set to Increase or Limits To be Slashed
The credit crisis has had the effect of causing a rupee liquidity crunch in India in spite of very little Indian exposure to the international credit markets. This has had a negative effect on unsecured loans and credit card debt. Most lenders are charging higher interest rates (though for now a cap is in place) and they have been reducing their credit limits on existing accounts.
Card issuing banks normally operate within a band when charging interest and the liquidity crunch has meant that these bands are expanding outwards which has the result of higher effective rates of interest for the consumer.
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The Future for India Remains Bright
The credit crisis has caused a liquidity crunch in India. The global dollar shortage, FII outflows (and purchase of dollars by Indian banks looking to fund overseas operations has all caused the Rupee to depreciate against the US dollar, (FII’s have been net sellers this year selling almost US$10 Billion or Rs 49,000 crore, compared to buying or net inflows of US$ 17 Billion or Rs 83,300 crore in 2007). The Rupee is now at a six year low contradicting any relief that resulted from the fall in crude oil prices. India’s oil import bill in Rupees continues to remain high.
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RBI Approves Mobile Banking
The Reserve Bank of India (RBI) approved Mobile Banking norms for banks on Wednesday and banks that are core banking solution enabled will be able to offer mobile banking to their customers. This means that customers with bank accounts that have cards attached to them, will be able to debit and credit their bank accounts using mobile phones and the service will be available immediately.
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AIG’s Future plans Include holding onto Tata AIG
Reports suggest that AIG are likely to continue to hold on to their stake in its Indian insurance joint venture with Tata & Sons. Tata AIG is the name of the joint venture in life and general insurance which would require a further US$ 15 Million Rs. 69 Crore equity commitment from AIG over the next two years. It is highly unlikely that AIG will not be able to meet such a small commitment given the size of its balance sheet. Doing so would ensure it had exposure to one of the fastest growing economies globally with a population of over 1 Billion.
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