Deutsche Bank infuses Rs.455 cr to grow Indian business

Deutsche Bank AG, Europe’s largest lender with $3.07 trillion (Rs.153 trillion today) of assets, has infused Rs.455 crore to strengthen its Indian operations. The German bank has been investing money every year in its Indian branches since 2007, with 2009 being an exception.
“The capital base pertains only to the India branches and excludes all other Deutsche Bank entities operating in India—equity broking and investment banking, primary dealership, asset management and shared services,” Deutsche Bank said in an emailed statement on Tuesday.
The latest capital infusion will take the bank’s tier I or core capital in the country to a little over Rs.5,500 crore. Tier I capital includes a bank’s equity and reserves.
Deutsche Bank’s India branches have shown a compound annual growth rate of 38% over the last five years. The German bank recently received nod from the Reserve Bank of India (RBI) to open two branches in Ahmedabad and Surat, which will take its network to 17 outlets.
The additional capital will be used to service and finance the bank’s corporate, institutional and retail clients, said Gunit Chadha, chief executive of Deutsche Bank’s Indian unit.
Corporate and investment banking makes up more than 80% of Deutsche Bank’s business in India. In April 2011, the bank sold its credit card business to IndusInd Bank Ltd, but has maintained that it will continue to invest in retail banking, although this will remain a small part of its overall business in India.
In 2010-11, Deutsche Bank’s profit in India rose 41% to Rs.630 crore, helped by rising income from advances, trading and fees. It earned Rs.1,880.16 crore from advances and investments, up from Rs.1,578.87 crore in the previous year.
This is the right time for foreign banks to strengthen their Indian businesses to service corporate clients in the country, said Manish Ostwal, banking analyst at Kisan Ratilal Choksey Shares and Securities Pvt. Ltd.
“Even larger banks such as Standard Chartered are now focusing on wholesale banking because getting permission to open branches from RBI is difficult, while helping Indian companies to get capital from abroad is their strength, which no other local bank except the State Bank of India can provide,” Ostwal said.
Deutsche Bank’s new branch licences from RBI have come after two years. UK-based Standard Chartered Plc received permission to open three branches—one each in Jaipur, Jodhpur and Thiruvananthapuram in 2010. The last time both the banks opened branches was in 2010.
In India, Deutsche Bank is the smallest of the big foreign banks in the country, including Standard Chartered, Citibank NA and the Hongkong and Shanghai Banking Corp. Ltd (HSBC). RBI distributes 12-18 branches among all foreign banks every year. SBI Recruitment 2012
HSBC and Citibank have not got permission to open any new branch in the current cycle, their spokespersons said.
India’s reputation as one of the fastest growing economies in the world has also led to lenders such as Deutsche Bank in getting capital here, Ostwal said.
“The recent ratings downgrade of the Indian banking sector has made it difficult for Indian banks to access funds and, hence, foreign banks have an opportunity to strengthen their position in areas such as foreign exchange, commodities, merger and acquisitions and structured finance,” the analyst said.
In November, global rating agency Moody’s Investors Service Inc. downgraded the outlook for Indian banks to negative from stable, citing a likely deterioration in asset quality in the next 18 months.

Credit card business will grow robustly

Marketers and market-makers in the financial services industry have for years salivated at the great Indian opportunity for growing the credit cards market.
And it indeed has been a great opportunity and will continue to be so in the coming years. A growing middle class, rising aspirations and an increased propensity to spend by an inherently young population creates heady mix of untapped market opportunity.
The credit cards industry is today coming out of what have truly been testing times. The financial crisis of 2008-2010 remains fresh in our minds. With the tide seeming to have turned finally and with the indicators across almost all key areas looking positive, if not robust, there is fresh optimism in the industry and an almost unanimous positive view that the industry is today placed well for sustained growth.
Learning from the past
Before we look forward to the future, we have to understand the past. As they say, hindsight is always 20-20. The question remains: what went wrong?
The answer lies not just in one reason but a multitude of factors which both issuers and consumers should introspect upon. Credit is, at the end of the day, a powerful tool and a truly flexible option to meet immediate expenses when cash is not at hand.
The credit card, therefore, adroitly addresses medical emergencies, facilitates holidays and travel, or fulfils the aspiration of purchasing that new television or washing machine, with the knowledge that the payment may be done in parts over a period of time, or when that bonuscheque comes in. What will be key is, how both, consumers and card issuers, will treat this extremely powerful tool?
While the global financial crises is ascribed as one reason for the fallout in unsecured lending in India, the impact was also compoundedby the misplaced market growth ambitions of some credit card issuers who wereimmersed in the mantras of market share and market expansion. With access to easy credit card facilities from over-exuberant and ambitious card issuers, customers somehow seemed to have lost the key message: that credit is an important tool, to be used with responsibility and prudence.
Future bright
The future, however, is bright. Several factors strongly indicate that credit card businesses will grow robustly in the coming years. The first is the emergence of strong credit rating agencies in India. Card issuers now have access to complete information of the applicant prior to issuing a card.
The key will be in seeing how the issuers use this information in taking prudent decisions. All information used in determining the creditworthiness of an applicant ultimately hinges on determining the ability and intention of the applicant to pay back the amount spent or borrowed. The expertise and sophistication of issuers in making such judgments, leveraging bureau data and recalibrating their own policies from time to time, will determine how the industry fares infuture.
Use the powerful tool of credit with wisdom
Customers, too, have now started understanding the importance of using credit wisely. With regulators and banks educating customers about the benefit of a good credit history, it is envisaged that better sense will prevail. Both issuers and customers now have the benefit of hindsight! Taur Mittran Di
Card issuers will have to clearly strategise as to which segments they want to operate in. Most card issuers have moved completely away from the mass market segments as the risk-reward equations have just not borne out.
Their predominant focus has been a move to mass affluent segments and high networth individuals. These segments are traditionally more robust and easier to evaluate. Credit underwriting norms have been tightened across the board. Card issuers also have to become more judicious about growing the market purely for that sake, as inactive cards can savage a portfolio.
It is no wonder that of the 28 million cards which were in the marketplace in 2008, only around 20 million exist today. While there has been a huge de-growth in plastics, there has been no slowing down the overall industry spends which have been growing robustly.
All of which goes to show the wastage by the industry in issuing cards to customers who saw no value in the product. At the end of the day, the consumer is king and will patronise a product or a brand which adds enhanced value to his / her life.Free cards, in many ways, were perceived to be free of value and benefits, and, as a corollary, have been freed of customer patronage!
Customer is king
Card issuers will now have to work extra hard in delivering enhanced value to consumers. Creating and managing sophisticated products, constantly enhancing value and innovating on service delivery, will be key drivers of future growth.
It’s a large market, so exercise care
At this stage, the opportunity looks large with a large untapped market potential. Only about 3% of the total personal consumption expenditure in India is done on plastic cards. With the government keen on moving more payments on to electronic media, the spends on plastic cards will continue to grow significantly.
The sustained growth in organised retail, the booming e- commerce space, the aspirations of one of the youngest populations in the world and the strong, globally savvy emerging middle class… all foretell that it can only be a boom time for the credit cards business in the coming years. The key will be to take measured steps based on prudence and good judgment. Let the good times begin!

Cheaper mortgages offer setting up chance

Although rock-bottom interest rates are playing havoc with investment returns, they offer a retirement-planning opportunity that adviser Marguerita Cheng now uses regularly: mortgage refinancing.
“For our reviews, we ask clients to bring in their mortgage statements and investment statements,” said the Ameriprise Financial Inc. financial adviser. “Since you can't control markets but can control what you save and spend, why not lock in a lower rate today and save more money for the future?”
Just last month, Ms. Cheng met with a 55-year-old client, a federal employee, who wanted to replace her 30-year 5.25% mortgage with a 15-year 3.25% mortgage so that she and her semiretired husband, a professor, could be almost debt-free once they stop working.
The couple owes $116,000 on the remaining 20 years of their mortgage, with a monthly principal and interest payment of $1,365. The refinancing not only would shorten the term of mortgage by five years but reduce monthly payments to $1,268.
“These clients have already been making extra principal payments, so if they continue, they can be fully paid off in 10 years,” Ms. Cheng said.
Given the Federal Reserve's decision last month to keep the federal funds rate in the 0% to 0.25% range at least until the end of 2014, many advisers think that replacing higher-cost debt — principally home mortgages and credit card balances — or paying it down faster, offers a savings opportunity that is more attractive than many investment returns.
In addition, advisers, worried about future inflation, feel that it's wise to lock in today's low rates.
“If you have a fixed-rate mortgage, you're happy if inflation goes up: The size of your debt gets smaller in real dollars,” said Christopher Van Slyke, an adviser with Trovena LLC. “If you have a variable-rate loan or a credit card, you're in big trouble.”

Kotak Mahindra Bank buys Barclays credit card portfolio

Kotak Mahindra Bank has acquired the non-performing portfolio of Barclays Bank’s credit card business in India. The deal, experts said, gives momentum to the sale of stressed loan market in the country which has been having a dry run following stringent regulatory norms introduced in 2007.
Last month, Standard Chartered Bank bought the performing portfolio of Barclays’ credit cards business in India. Barclays has decided to exit retail assets business in India and is also looking for buyers for its Rs 3,000 crore retail loan portfolio.
The portfolio acquired by Kotak Credit Card is estimated to be around Rs 250-300 crore and comprise nearly 200,000 cards. The private sector lender’s in-house asset reconstruction team will be responsible for recovering the dues from these accounts.
While the deal value was not immediately known, banks in India have to follow the Reserve Bank of India’s (RBI) guidelines on valuation of stressed asset sale.
According to RBI guidelines released in October, 2007 banks while selling non-performing assets have to work out the net present value of the estimated cash flow associated with the realisable value of the available securities net of the cost of realisation. The sale price, generally, should not be lower than the net present value.
Banks in India have once again expanding their credit cards businesses aggressively after a gap of nearly three years.
Standard Chartered Bank became the fifth largest credit card issuer in the country after it bought 170,000 credit cards from Barclays. The foreign lender is believed to have acquired this portfolio at a hefty discount to the book value, which was estimated around Rs 180-200 crore.
The transaction was the second buy-out in the credit card space following IndusInd Bank's acquisition of Deutsche Bank's credit cards business earlier in 2011. Yaad Teri Awarapan 2 Mp3 Song
IndusInd Bank bought 200,000 cards portfolio from Deutsche Bank including the foreign lender's operating platform, technology, and staff. The private bank launched 'IndusInd Credit Cards' on June 1, 2011 and aims to grow the portfolio four-fold to Rs 800-900 crore within three years.
"We believe after three to four years of bloodbath and washout, the credit card industry is now ready to take off once again. This is a high-risk, high-reward business, and we think if we manage the risks properly, the rewards will be higher now," Romesh Sobti, managing director and chief executive of IndusInd Bank, told Business Standard in an interview post acquisition of the cards business.
Even the established players have turned aggressive in growing their credit cards operations.
HDFC Bank, the largest issuer of credit cards in India, aims to double its portfolio in the next couple of years. The bank, which has 5.05 million cards, expects its portfolio to touch 10 million in two years, including two million cards exclusively for its women customers.
The bank also launched 'Infinia' cards last year for the uber-rich community, positioning it against the American Express, or Amex cards.
Bankers said that unlike the last time, there will not be significant erosion in the banks' asset quality, since the expansion strategies are backed by rich information on borrowers' credit histories obtained from the credit bureaus.
In September, 2011 the number of outstanding cards in the industry increased for the first time in eight months to 17.6 million. The number of cards has remained around the same level since then.

Best way to simplify credit card usage

Ajay has to first deal with the question of whether he needs multiple credit cards and, if so, how many. Having more than one card is useful when a large payment has to be made or when a particular card cannot be used.
Ideally, the cards should have different affiliations, such as MasterCard and Visa. It is also a good idea for Ajay to dedicate one card for official use, so that there is no confusion while claiming reimbursement for payments.
Since his job involves a lot of travelling, using a co-branded card that is linked to an airline will help him in official use as he can get credit for usage. Two cards for personal use and one for work-related expenses should be enough for his needs.
While reducing the number of cards, Ajay should consider retaining older cards with a good credit history since they are likely to have a positive impact on his credit score. The other factors he needs to consider include the acceptance of the card, authorised limits, billing cycles and costs associated.
The cards that he should first consider closing are those that are linked to (DJ H Jawani 2) stores or products since they add very little value and may even encourage spending.
Ajay should also set up an online payment process for his card, so that he is able to pay his bills from his bank account using the Internet or mobile banking services. Several online services enable paying bills on time, which Ajay should make use of. He should set in place a system to keep track of the expenses charged, the payment and dates of payments.
Having a place to keep credit card slips will make it easy to access them for checking against card statements. He should sign up for online/mobile reminders of due dates, online statements and payment facility. These are things that Ajay can do to continue enjoying credit facilities in an efficient manner.

Credit Cards payments up by 22 percent

In mean time, peoples pay more money with their credit cards. Payment through credit cards up by 22 % in last financial year. But the active credit card goes down by 2.7%.
Debit cards transactions increased by 46.5 % because of the increase in ATMs chains.
Most of the banks issues ATM for their saving account holders for withdrawing easy cash from ATM. Now active debit card goes to 22.8 cr while the credit card was just 1.8 cr.
SBI stood at no.1 with largest depositor base in India, SBI issued 8 cr debit cards, No.2 is ICICI Bank with 1.65 cr, 3rd is HDFC 1.31 cr, In credit card bazaar, HDFC at No.1 with over .5 crore active credit cards followed by ICICI Bank, SBI, Citibank and standard chartered. Calculate your emi with EMI Calculator
RBI data shows, the value of transactions at domestic ATMs using debit cards to be Rs 9,48,346 crore across 398.40 crore transactions in the March 2010-February 2011 period, while domestic ATM-based credit card transactions were worth just Rs 934 crore across 0.19 crore transactions.

Debit card swipes hit credit card usage

July 2011 marks a tipping point in the payments space. For the first time, debit cards have been used in more transactions than credit cards. While credit cards are still more significant in value terms, the gap between the two has shrunk.
As compared to 2.56 crore credit card transactions in July 2011, debit cards were used 2.66 crore times. This has continued in August when credit cards were used 2.76 crore times, while debit was used on 2.77 crore occasions. In the past, credit card swipes always outstripped that of debit. In the whole of 2010-11, credit cards were used for 26.51 crore payments, while debit cards were used 23.7 crore times.
In value terms credit card payments accounted for Rs 37,678 crore worth of payments up to August 2011, while for debit cards it was Rs 20,483 crore. Total value of debit card transaction is lower than that of credit cards is because on an average an individual spends Rs 2,989 every time the card is used as compared to Rs 1,632 which is the average for a debit card payment. Click to know more and apply for SME Loan
Bankers say that it is only a matter of time before debit cards completely dominate the payment space. The reason for this is the sheer numbers. Debit cards have been growing by leaps and bounds. From 4.97 crore cards in 2005-06, their number has risen to 25.14 crore as on August 2011, according to data released by the Reserve Bank of India in its latest monthly bulletin. Credit cards, on the other hand, have been shrinking since the global crisis. From a peak of 2.8 crore in 2008, the number shrunk to 1.8 crore in March 2011. This has come down further to 1.75 crore in October 2011.
The decline has been largely because of the foreign banks and banks like ICICI which have been shrinking their portfolio. According to industry sources, ICICI Bank's card portfolio has continued to shrink during the current year as well. While other lenders such as HDFC Bank and Axis Bank have started issuing cards at a much higher pace, the issuances are not enough to bring up the overall industry numbers.
While debit cards have seen growth in issuances, cardholders have not been using them for transactions. In 2010-11, the average transaction per card has been 14. As compared to this, the average debit card has been used only once in a year. While the number of debit cards has gone up more than five times in five years the average number of transactions has not.
Even five years back the debit card usage was on an average just once in a year.
Credit cards, on the other hand, are seeing an increase in usage. At the time of the global financial crisis, the average usage of cards had dipped to eight times in a year. At the end of March 2011, this had improved to 14. Bankers say that this is because issuers have become choosy on issuing cards. Second, multiple card holdings have come down as even cardholders are realizing that it makes more sense to consolidate purchases in one card in terms of rewards.

Banks defer foreign fund-raising plans

Volatile markets and poor investor confidence have made Indian banks defer raising funds from foreign markets through medium-term notes (MTN) and instead find alternative routes.
Chennai-based Indian Bank, which had plans to raise $1 billion in two tranches during the current financial year though MTNs, has deferred its plans and will wait till the market condition improves. The state-run bank has opted for the line of credit option to meet its funding requirement.
“If we go for raising funds through the MTN route, we will have to find assets immediately else, the cost of keeping the money idle will be very high. So, we have opted for the line of credit route,”
T M Bhasin, chairman and managing director of Indian Bank, told Business Standard.There has been a moderation in growth owing to monetary tightening by the Reserve Bank of India (RBI). Apply for Credit Cards Online
The markets worldwide have been jittery recently due to the euro zone crisis and the US downgrade. According to a recent report by ratings agency Crisil, the Indian corporate sector fears a credit freeze in advanced nations, which could impair their ability to raise debt and roll it over. “We can get credit up to $500 million through foreign banks as and when we require it. This is far more cost-effective in an environment where we need to protect our net interest margins. Hence, instead of the MTN route, we have opted for the line of credit route,” Bhasin added.
The cost of funds for the banks has been rising due to RBI's monetary tightening. The interest rates are nearly 300 basis points higher than the foreign markets which have made the banks to hunt for foreign funds.
Another state-run lender, Union Bank of India, has shelved its plans of raising $300-500 million by September through MTNs for the time being, due to unattractive high yields being demanded by the investors. “The credit spreads have widened significantly. Indian banks generally leverage the spreads between the borrowing and lending cost. In view of this, it is not attractive in the present scenario to raise funds for onward lending,” said V K Khanna, general manager (treasury) at Union Bank. The bank would consider raising funds as and when the markets and pricing become attractive, Khanna added.
Lenders prefer taking loan in tranches for meeting their short-term funding requirements. Banks are not keen on giving credit guarantee now.
IDBI Bank is another lender that was looking at raising funds overseas through MTNs but has put its plan on the back burner for the same reasons as above. “Yield is not very attractive for us at the moment. The rate at which we want to borrow must meet the lenders' expectations. So, till the market conditions improve we will not be looking at raising funds overseas,” Chief Financial Officer P Sitaram said.

Federal Bank look at venture into credit card

In a bid to extend its retail clientele, private sector lender Federal Bank is planning a foray into credit cards. Initially, the bank plans to outsource the back-end mechanism and would only market the product under its brand name.
“We have sensed a need to launch a credit card,” Abraham Chacko, the executive director of the bank, told Moneycontrol.com.
“It is at the preliminary stage, and we are internally discussing the proposal. We are connecting some external parties to gain knowledge about outsourcing the product in terms of pricing, customers and other business details,” Chacko said.
There are some banks and financial institutions, which develop back-end mechanism of credit cards for other institutions on a cost sharing basis. Some of those include Bank of India , State Bank of India , SBI Genpact, ICICI Bank , Standard Chartered Bank and others.
Federal Bank has an existing debit card base of around 16 lakh. Its retail business (with special focus on non-resident Indian customers) forms around 55% of total business. Retail products currently include gold, home and car loan.
If the credit card business is able to achieve a certain scale, Federal Bank will stop outsourcing it and will operate it on its own. The executive director, who had spent over 20 years in foreign banks before joining Federal, however, did not mention any tentative launch time.
“We will also open 1,000 branches in CY2012. Half of those branches will be out of the state of Kerela. We will equally drive efforts to boost our fee income through those branches,” he added. Currently, majority of its branches are confined within the geographical boundaries of the southern most state.
Meanwhile, the bank is expected to open a branch in Dubai soon. The Reserve Bank of India is yet to give a final approval for that. The lender also aims to open two representative offices in Singapore and US or UK to expand its NRI customers’ base. In June quarter, its loan book stood at around Rs 32,000 crore, up 18% year-on-year.
Last six months, two top officials with vast banking experience from foreign banks have joined Federal Bank. They are Shyam Srinivasan as MD and Chacko himself. This led to some market optimism about the south-based bank, which was widely considered as a low-profile community driven lender.
At 12:45 hours, Federal Bank shares were trading at Rs 357.50, down 1.20%.

Find best Deals on Car loans how

They are standard reducing balance schemes and cheaper, because the manufacturer is subsidising the loans by giving extra but indirect discount in terms of lower interest rate, experts say. "Typically, car manufacturers collaborate with financiers to come up with a custom offer on one or all the cars they have in the portfolio. Both the car manufacturer and finance company go the extra mile to make the deal sweet.
This way, these deals are normally cheaper than the generic auto loan schemes offered by the banks. The availability and sweetness of these schemes depend on how badly a car manufacturer is looking to do sales. With a slow market like today, there are plenty of such deals even on fastmoving cars," says Banwari Lal Sharma AVP - Marketing, Car-Wale Automotive Exchange Private Limited.
However, don't go by the rates alone. The numbers could be highly deceptive when it comes to the car loan market. Car loan interest rates, unlike those on home loans, are not easy to compare. This is because banks just quote the rack rates, whereas the effective interest rate is much lower and it varies from dealer to dealer. That is why if you really want to evaluate a car loan offer that would work lighter on your pocket, you have to do the math yourself.
"The bank specifies the rack rate on which it would propose to lend. The dealer has the option of ploughing back his commission, thereby reducing the interest burden for the customer. The decision on the extent of commission to be ploughed back rests with the dealer. Manufacturers also provide subventions, from time to time, to ensure stock liquidation, and these may also be passed on to the customer to reduce his effective interest burden. However, the bank would continue to maintain its lending rate," says Ashok Khanna, senior executive vice-president & business head, vehicle loans, HDFC Bank.
Hence, it all boils down to the dealer-bank tie-up and how much benefit the car dealer passes on to the customer. Here, we help you navigate the process of identifying the best car loan deal.
EVALUATING THE OFFERS
With the hardening of interest rates and fuel prices touching the sky, discounts and subventions by manufacturers are the only way to make the car market survive the tough time. Most loan deals are genuine in nature, still buyers have to be careful. They need to understand the scheme very well and compare it with the other schemes from different finance companies.
"There have been instances of a non-standard loan product at 7% interest rate working out to be more expensive than a 12% interest rate standard loan because the non-standard product had a different compounding base and wasn't on a monthly reducing basis," says Sharma says.
A subsidy or discount offered by a manufacturer can be factor in while calculating the loan burden to make the deal look much better. For example, a Rs 3-lakh loan at an interest rate of 13% for five years will have an EMI of Rs 6,753. "Let's assume that the dealer gets a discount of Rs 20,000 to be offered to the customer.
He doesn't tell it to the customer but reduces it from the loan amount, making the EMI go down as low as Rs 6,303. Or he may also choose to tell the customer that the effective interest rate he is offering is 9.5%. A discount of 20,000 doesn't sound as lucrative as an interest rate of 9.5% in the current scenario," says Sharma.

SCOUTING FOR THE BEST RATE
Before scouting for the best rate, finalise the car model and the loan amount. If you plan to fix the model based on the ongoing loan offers, it will only add to the confusion. Once you finalise the car model and the loan amount, then calculate the EMI with the help of the EMI calculator available websites and portals of many banks.

RBI asks banks to implement safety measures for card usage

In order to minimise fraud cases and ensure security of transactions, the Reserve Bank of India (RBI) on Thursday asked banks to implement various safety measures related to credit card and debit card usage over a period of next two years.
The central bank directed banks to strengthen the existing payment infrastructure and future proofing system along with adoption of fraud risk management practices within a period of next 12-24 months, RBI said in a notification.
"The increased usage of credit/debit cards at various delivery channels also witnessed the increase of frauds taking place due to the cards being lost/stolen, data being compromised and cards skimmed/counterfeited. There is, therefore, an imperative need to secure such card based transactions...," it said.
It also emphasised on the need to migrate to Euro pay MasterCard Visa (EMV) chip and PIN based cards from the present magnetic strip cards as the later is vulnerable to skimming and cloning.
"The need for a complete migration to EMV chip and PIN based cards could be considered based on the progress of 'Aadhar' (Unique Identification Card) in about 18 months," it noted.
As per the circular, the central bank has directed banks to implement improved fraud risk management practices by September 30, 2012. The banks have also been directed to strengthen merchant sourcing and monitoring process by September 30, 2012.
The central bank also given a timeframe till September 30, 2013, to banks for securing the technology infrastructure.
To strengthen infrastructure for accepting these cards, RBI has said that commercial readiness of acquiring infrastructure to support PIN at POS (points of sale) should be ready by June 30, 2013.
Similarly, the enablement of all POS terminals to accept debit card transactions with PIN should be completed by June 30, 2013.
The apex bank also directed banks to be ready from technical perspective to issue EVM cards by June 30, 2013.

HSBC aims to grow unsecured retail biz in India

HSBC is looking to grow its unsecured Indian loan portfolio, mainly credit cards, its country chief executive said, as its retail operation moves towards a return to profitability in Asia's third-largest economy.
Banks in India slashed unsecured lending after personal loans and credit card dues turned bad following the global financial crisis. HSBC India saw a 46 percent drop in overall profit for the first half of 2009 as losses on retail lending more than doubled.
"At this stage, we are well positioned to grow our unsecured book, but we will do it in a cautious and calibrated way," Stuart Davis, who took over as India chief executive in April 2009, told Reuters in an interview on Tuesday.
"We won't be looking at open market sourcing as we did perhaps four or five years ago," he said, referring to the practice of issuing cards to customers who do not already have an account with the bank.
HSBC's expansion of unsecured lending in India comes as it is turning around the performance of its retail banking operations in the country, the sixth biggest contributor to the UK-based bank's group profit.
In the first half of 2011, HSBC, Europe's biggest bank, posted a loss of $4 million in its India retail banking and wealth management business, narrowing from a loss of $49 million a year ago.
Fewer than 18 million of India's 1.2 billion people use credit cards. In China, a country with a slightly higher population, more than 200 million credit cards were in use as of a year ago.
Foreign banks lack the branch networks of local lenders like ICICI Bank and HDFC Bank, India's biggest card issuers, but tend to attract the most well-heeled customers in a country where incomes are rising fast.
London-based Standard Chartered, one of the biggest foreign banks in India, expects growth of 30-35 percent in new customers this year, Shyamal Saxena, head of retail banking products, had said in July.
HSBC's overall first half pre-tax profit in India rose 32.6 percent to $451 million. The bank is on track to achieve its target of $1 billion in India overall profit in 2013, Davis said.
LOAN GROWTH
HSBC, one of the top three foreign commercial banks in India along with Citigroup and Standard Chartered, expects to grow its India loan book "at least in line" with the sector's growth in this fiscal year, Davis said.
The country's central bank expects credit growth at 18 percent in this fiscal year, down from an earlier projection of 19 percent. HSBC posted a 17 percent rise in demand for loans in the last fiscal year to end-March 2011.
India raised interest rates last week for the 12th time in 18 months, triggering worries about a slowdown in demand for corporate and retail loans from banks.
"There is certainly a slowdown in loan demand...(but) we are not looking at a situation that we are looking at in Europe and the U.S. where loan growth is negligible," he said, adding the bank also plans to grow its India mortgage loan book.
The bank's home loan book in India grew 11 percent in the first half of this calendar year to $949 million.
"We feel very positive about the growth scenario and our business here and in the absence of some unforeseen macroeconomic downturn here in India we are positive about our growth," Davis said.
The bank, which plans to shed 30,000 jobs globally in the next three years to cut costs, expects to raise its India banking operations headcount over the next few years from about 7,500 now on the back of growth in its business, Davis said.

IDBI to float arm for core fund

Public lender IDBI Bank Ltd will set up a non-banking subsidiary to float an infrastructure debt fund.
“We are waiting for the Reserve Bank of India to come up with the guidelines for setting up non-banking finance companies (NBFC) that are eligible for floating infrastructure debt funds. The banking regulator is expected to announce its guidelines for setting up such NBFCs within the next six months,” IDBI Bank executive director R.K. Bansal told reporters today.
With Rs 33,000-crore credit outstanding in infrastructure projects, IDBI Bank has been planning to launch an infrastructure debt fund (IDF) to generate more long-term resources for power, port and road projects. Under the current regulations of the RBI, a commercial bank can lend a maximum of 25 per cent of its loan book to the core sector.
The Planning Commission has estimated the funding requirement of the infrastructure sector at $1 trillion with banks being the largest lenders. Insurance companies are not allowed to invest in infrastructure firms having a credit rating below AAA.
In June, the government issued a guideline, based on the recommendations of the Deepak Parekh committee, allowing banks to float infrastructure debt funds either through trust-based asset management companies (basically mutual funds) or through non-banking finance companies.
A trust-based fund will be regulated by the Securities and Exchange Board of India, while a fund set up as an NBFC will be under the Reserve Bank of India. Apply for Best Home Loans in Kolkata
Debit-credit card
IDBI Bank has launched a debit-cum-credit card, Magic Card, for its salary savings account holders.
“The card will work as a debit card till the account holder has balance in it but once exhausted, any further withdrawal or expenditure, the magic card will act similar to a credit card,” IDBI Bank chairman and managing director R.M. Malla said.

Improve your credit score

A CREDIT SCORE is a measure of how diligently you make payments relevant to loans, credit cards, telephone bills, insurance premiums, rent cheques and so on.
Credit Information Bureau (India) Limited (CIBIL) , which collects your credit information from banks will soon be keeping your credit scores on the basis of your bill payments too. CIBIL scores will range between 300 and 900, and a number of the above aspects will go into making that score. However, the most significant of these are repayment of loans and credit cards ¡V these factors will determine your loan eligibility and whether a loan can be granted to you in the first place or not.
Considering the important role your credit report plays in your financial life especially with relevance to loan borrowing and establishing credit worth, it¡¦s time you put some thought into how best you can make your credit report work to your advantage.
Here are list of things you keep your credit score up and above any kind of default:
1. Ensure you get your own copy of the credit report, at least on an annual basis
- Subject your credit report to a thorough scrutiny.
ƒ{- If you have nagging questions about any data, follow it up with CIBIL or the credit agency who has collated the data on the credit report.
ƒ{- Any discrepancies or pending defaults that has already been cleared must be immediately corrected or updated to ensure your credit score is not affected.
2. How do you correct discrepancies?
- Take up the issue with the bank in question first. For instance, if a debt has already been paid off and but the report doesn¡¦t show so. Call the bank and ask them to update with immediate effect.
ƒ{- The bank will then update the credit agency regarding the status and all is well. This approach is less time consuming and far better than directly contacting the credit agency. Punjabi Movie Jihne mera dil lutiya
What if the bank does not oblige to make the changes¡K
- Take up the matter with the credit agency and the banking ombudsman. However, first, wait for a period of 1 month for your bank to take corrective action.
- Act quickly and follow up with the concerned credit agency and the bank. Keep a record of when you have filed a complaint or sought clarification.
3. Put a priority check for your bill payments
Whether they are loans, credit card payments or insurance premiums -- every payment counts. If you need to be reminded about your payment, set up an automated system with your bank to get it cleared within the due date. It is a sure shot way to improve your credit score.
4. Try using your credit cards the smart way
Use your credit card! It serves as an excellent tool to boost a good credit score if utilised properly. However, the trick is to avoid making late payments. Things like not stretching it too close to your credit limit, regular use of the card but timely payments upfront is proof of how you manage credit lent in the short-term.
5. Net worth is key
Your credit report is based on the flow of credit and debt. Here, the ratio between these two factors is directly related to your credit score average. For instance, if you have several outstanding debts, and even if you pay them on time it would still affect your credit score.
Hence try and pay off as much debt as possible and keep them to a minimum before taking a fresh debt or loan.

Prevent fake transaction dual factor confirmation

Every time your bank asks for an additional password to authenticate your credit card transaction, you may feel a little irritated, since it takes effort to remember and type the extra words to complete the transaction.
But this extra layer of authentication actually prevents the misuse of your credit card, especially through online transactions. The dual-factor authentication process allows debit and credit card customers to validate their identity without using data visible on the card. As a result, banks and payment portals can check if the transaction is genuine or counterfeit in nature.
However, like any routine banking transaction, you have to enter thelog-inidandthepassword before this. The rationale is that a hacker cannot get access tothecustomer'suserid, password and mobile phone simultaneously. Itisalsoconvenientasa mobile phone is an extended arm for most individuals. Two-factor authentication is a broad term and can be implemented in multiple ways.
Banks could use mobile phone or a grid or a scrambled key chain as an additional security measure for net banking. For net banking, however, banks ask for the additional authentication only if an individual has to transfer money for third-party transactions.
For example, you may transfer money to your child or parents on a monthly basis. If you register them as beneficiaries, you don't have to go through the additional authentication . These transactions are low risk in nature as the hacker will only transfer money to himself and not to any of these registered beneficiaries . For credit cards, Visa and MasterCard have introduced an additional password, which is mandatory for any online transaction. The password can be set by the customer and changed at his/her convenience.
The scope for a fraudulent transaction is higher as all a hacker needs is the credit card number, the expiry date and the CVV number which are mentioned in the card itself. As per RBI's stipulations , all banks have to follow the dual factor authentication model for credit card transactions.
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