Credit Card Borrowing Limits To Be Reduced
Indian credit card issuers have been forced by rising defaults and a lack of Rupee liquidity to reduce borrowing limits of existing customers. Leading card issuing banks such as ICICI Bank, SBI Card, Citibank and HSBC said they will revise the credit limit selectively after assessing the customers’ credit history.
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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.
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Supreme Court Admits Credit Card Interest Rate Appeal.
The Business Standard reported on Wednesday that the Supreme Court of India has admitted the appeal by the banking industry lobby against the order of the National Consumer Dispute Redressal Commission which sought to limit credit card interest rates.
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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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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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Indian Credit Card Holders Should Expect Annual Card Fee’s
Indian credit card issuers that have been lobbying for an end to the cap on penal rates of interest are upgrading existing customers to platinum or titanium cards. Card issuing banks are doing this in the eventuality that the Supreme Court upholds the National Consumer Disputes Redressal Commissions decision to cap interest rates at 30%.
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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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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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