Indians are using more of debit cards than credit cards for their banking transactions, says the Reserve Bank of India (RBI) data for the year ended 2009-10. While the transactions through debit cards jumped by 42 per cent at Rs 26,418 Cr in the last fiscal from Rs 18,547 Cr in 2008-09, it slipped by 4 per cent for credit cards to Rs 62,852 Cr from Rs 65,356 Cr.
In the same period, the number of debit cards in circulation has also increased by 33 per cent as compared to a fall in credit card circulation by 10 per cent over the previous year.
The total number of debit cards increased to 17 Cr in 2009-10 from 12.8 Cr in 2008-09. On the contrary, the total number of credit cards went down to 23.4 Cr in 2009-10 from 25.9 Cr in 2008-09.
“Shopping through debit card has become more convenient now due to rise in point of sale terminals in various shopping centres,” says Subrat Pani, business head- cards, Kotak Mahindra Bank. "Volume of transaction has increased due to easy availability of debit cards, which are given with every newly opened bank account."
Industry experts also attribute the popularity of debit card to the cautious attitude of Indian consumers as a result of the recent economic downturn.
“While debit card can enable the consumer to track their spending better, it is also a great payment tool for those who are credit averse or are not credit worthy,” says a senior official at VISA, who did not wish to be named.
Downturn in the economy was the major reason for negative trend in credit cards. “During the slowdown, banks became cautious in issuing new credit cards to check defaults. Also, last year many lost their jobs which led to the decline in spending through credit cards,” said Pani.
Friday, June 18, 2010
Thursday, June 10, 2010
SBI the most trusted credit card brand
SBI Card has been voted as the most trusted brand in the credit card category in Reader’s Digest Asia Trusted Brands Survey, for the third year in a row.
Accepting the award, Abhay Kumar Singh, CEO, SBI Cards & Payment Services Pvt. Ltd, said, “We have consistently invested in new technologies and introduced new service offerings to make life simple for our customers. We are delighted that our customers have voted us as the most trusted credit card brand for the third year in a row.”
SBI Card has focused on customers-centric initiatives and offerings over the past decade. The recently concluded 250 service camps were one such initiative that helped SBI Card proactively reach out to 2,10,000 customers in 31 cities in India. SBI Credit Card is the only credit card company in India that offers customers the ease of 13 different modes of payment. Last year, SBI Card won several Indian and Asian awards including the most trusted brand in credit card category in the Reader’s Digest Asia Trusted
Brands 2009 Survey, a consumer choice award from CNBC Awaaz and ‘Asia’s Best Mature Captive Services Delivery’ award from the Shared Services Outsourcing Network (SSON).
Accepting the award, Abhay Kumar Singh, CEO, SBI Cards & Payment Services Pvt. Ltd, said, “We have consistently invested in new technologies and introduced new service offerings to make life simple for our customers. We are delighted that our customers have voted us as the most trusted credit card brand for the third year in a row.”
SBI Card has focused on customers-centric initiatives and offerings over the past decade. The recently concluded 250 service camps were one such initiative that helped SBI Card proactively reach out to 2,10,000 customers in 31 cities in India. SBI Credit Card is the only credit card company in India that offers customers the ease of 13 different modes of payment. Last year, SBI Card won several Indian and Asian awards including the most trusted brand in credit card category in the Reader’s Digest Asia Trusted
Brands 2009 Survey, a consumer choice award from CNBC Awaaz and ‘Asia’s Best Mature Captive Services Delivery’ award from the Shared Services Outsourcing Network (SSON).
Tuesday, June 1, 2010
Credit cards hit retail loan business
In the dispensation of retail loans, banks increasingly find their hands tied by the credit card history of applicants. The repayment history of all credit card holders is recorded by Credit Information Bureau (India) Ltd (Cibil) and disseminated among banks.
Both public and private banks told Financial Chronicle that taking decisions on retail loan applications was becoming problematic as credit card defaults had increased and loan applicants’ record showed up on their computers. But the disputed accounts were not mentioned in the history.
Bankers said there had been many cases where the ‘defaulters’ might not have been at fault, as credit cards were thrust on them, and charges piled on them even while their cases were under dispute. Routinely dubbing them ‘defaulters’, card-issuing banks promptly sent adverse reports against them to Cibil.
Cibil, the credit information company formed in 2004, hosts the credit record of borrowers of virtually the entire lending spectrum of the country -- banks, non-banking financial companies (NBFCs) and financial institutions. The credit history of a loan applicant is made available to lenders to minimise fraud and check potential defaults.
Expressing concern at the trend, an official of the retail lending division of Punjab National Bank said loans were often refused, and applicants asked to sort out the matter with the card issuer or approach Cibil.
“We are witnessing a high incidence of adverse reports. It is an issue of concern for us and the industry in general,” he said.
G S Rekhi, chief general manager of credit at Punjab and Sind Bank, has had a similar experience. “We are facing a serious problem due to instances of credit card defaults reported by Cibil. An increasing number of our loan requests are getting blocked due to the adverse credit card history of applicants,” Rekhi said.
Arun Thukral, Cibil managing director, admitted most of the problems were on the credit card front. “We are working to improve the reporting system where disputed accounts will be brought to the notice of lenders,” he said. Thukral did not want to put a number to the cases of what he called “credit card challenges”.
Lending institutions said they did not keep a statistical record of loan denials. However, an extent of the malaise can be gauged from the report of the banking ombudsman, whose office deals with complaints of bank customers. The report for 2008-09, which was released by the Reserve Bank of India in February, points out that credit card-related complaints accounted for 26 per cent of all complaints which numbered 75,000 during the year.
The number of credit-card complaints itself increased by over 74 per cent during the year, showing an uptrend. “The types of complaints continue to be those related to issuance of unsolicited credit cards, unsolicited insurance policies, recovery of premium charges, charging of annual fee despite the cards being offered free, issuance of loans over the phone, disputes over wrong billing, settlement offers conveyed telephonically, non-settlement of insurance claims after the demise of the card holder, abusive calls and excessive charges,” the report says.
The report may not give the full picture, as many customers do not approach the ombudsman, choosing instead to try and settle with their banks.
C S Jain, head of personal banking at IDBI Bank, said that often the problem was due to outdated records with Cibil. “The pace of updation of Cibil records appears slow. We have come across cases where the Cibil report points to a default but the individual concerned has a letter showing a settlement having been reached with his bank months earlier,” Jain said.
Cibil’s Thukral denied delays, saying his organisation constantly updated its database. “We have upgraded our system over a period of time. Today, it takes barely three or four days to upload data we receive. The data must be fresh and we have to depend on what lending institutions provide. Earlier, data were provided to us on a quarterly basis but now it is done every month. The task is enormous. We host borrower data from over 200 lending institutions,” he said.
IDBI Bank’s Jain said his bank had instructed its staff that adverse credit report showing defaults of up to Rs 5,000 should be ignored where prima facie it appeared that the borrower was not at fault. “If defaults are bigger, then we certainly take cognisance of the Cibil report. Wilful default is a clear indication of how a borrower will behave subsequently,” he said.
The Punjab National Bank official spoke of instances when they ignored the Cibil report “if we feel that these are cases of forcibly sending cards and compounding of charges. Otherwise, we ask the borrower to approach Cibil with the facts and get the data rectified,” the official said.
A State Bank of India official dealing with retail loans, however, said Cibil’s report was useful to the system. “It is a question of being able to correctly interpret the report. Banks have to learn how to assess the payment ability and likelihood of default based on the report. The entire credit information system functions on the basis that it lets the rest of the system know about what’s going on elsewhere. We are still in a nascent stage,” he said.
Both public and private banks told Financial Chronicle that taking decisions on retail loan applications was becoming problematic as credit card defaults had increased and loan applicants’ record showed up on their computers. But the disputed accounts were not mentioned in the history.
Bankers said there had been many cases where the ‘defaulters’ might not have been at fault, as credit cards were thrust on them, and charges piled on them even while their cases were under dispute. Routinely dubbing them ‘defaulters’, card-issuing banks promptly sent adverse reports against them to Cibil.
Cibil, the credit information company formed in 2004, hosts the credit record of borrowers of virtually the entire lending spectrum of the country -- banks, non-banking financial companies (NBFCs) and financial institutions. The credit history of a loan applicant is made available to lenders to minimise fraud and check potential defaults.
Expressing concern at the trend, an official of the retail lending division of Punjab National Bank said loans were often refused, and applicants asked to sort out the matter with the card issuer or approach Cibil.
“We are witnessing a high incidence of adverse reports. It is an issue of concern for us and the industry in general,” he said.
G S Rekhi, chief general manager of credit at Punjab and Sind Bank, has had a similar experience. “We are facing a serious problem due to instances of credit card defaults reported by Cibil. An increasing number of our loan requests are getting blocked due to the adverse credit card history of applicants,” Rekhi said.
Arun Thukral, Cibil managing director, admitted most of the problems were on the credit card front. “We are working to improve the reporting system where disputed accounts will be brought to the notice of lenders,” he said. Thukral did not want to put a number to the cases of what he called “credit card challenges”.
Lending institutions said they did not keep a statistical record of loan denials. However, an extent of the malaise can be gauged from the report of the banking ombudsman, whose office deals with complaints of bank customers. The report for 2008-09, which was released by the Reserve Bank of India in February, points out that credit card-related complaints accounted for 26 per cent of all complaints which numbered 75,000 during the year.
The number of credit-card complaints itself increased by over 74 per cent during the year, showing an uptrend. “The types of complaints continue to be those related to issuance of unsolicited credit cards, unsolicited insurance policies, recovery of premium charges, charging of annual fee despite the cards being offered free, issuance of loans over the phone, disputes over wrong billing, settlement offers conveyed telephonically, non-settlement of insurance claims after the demise of the card holder, abusive calls and excessive charges,” the report says.
The report may not give the full picture, as many customers do not approach the ombudsman, choosing instead to try and settle with their banks.
C S Jain, head of personal banking at IDBI Bank, said that often the problem was due to outdated records with Cibil. “The pace of updation of Cibil records appears slow. We have come across cases where the Cibil report points to a default but the individual concerned has a letter showing a settlement having been reached with his bank months earlier,” Jain said.
Cibil’s Thukral denied delays, saying his organisation constantly updated its database. “We have upgraded our system over a period of time. Today, it takes barely three or four days to upload data we receive. The data must be fresh and we have to depend on what lending institutions provide. Earlier, data were provided to us on a quarterly basis but now it is done every month. The task is enormous. We host borrower data from over 200 lending institutions,” he said.
IDBI Bank’s Jain said his bank had instructed its staff that adverse credit report showing defaults of up to Rs 5,000 should be ignored where prima facie it appeared that the borrower was not at fault. “If defaults are bigger, then we certainly take cognisance of the Cibil report. Wilful default is a clear indication of how a borrower will behave subsequently,” he said.
The Punjab National Bank official spoke of instances when they ignored the Cibil report “if we feel that these are cases of forcibly sending cards and compounding of charges. Otherwise, we ask the borrower to approach Cibil with the facts and get the data rectified,” the official said.
A State Bank of India official dealing with retail loans, however, said Cibil’s report was useful to the system. “It is a question of being able to correctly interpret the report. Banks have to learn how to assess the payment ability and likelihood of default based on the report. The entire credit information system functions on the basis that it lets the rest of the system know about what’s going on elsewhere. We are still in a nascent stage,” he said.
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