New Super Premium Credit Card lauched by ICICI Bank

ICICI Bank launched a credit card targeted at the super affluent. Customers will get two different Credit cards, one each from payment gateways American Express and MasterCard, but both will be linked to a single card account.
The card christened Sapphiro is the third offering in its Gemstone collection and is aimed at super affluent segment and the bank's wealth management clientele.
Customers will get two different cards, one each from payment gateways American Express and MasterCard, but both will be linked to a single card account, it added.
Details on who qualifies to get the card and membership charges, if any, were not specified by the bank in the statement.
"The Sapphiro takes the level of privileges for our super affluent and wealth management consumers several notches higher through the high-end experiential rewards on offer," managing director and chief executive Chanda Kochhar said.
Card users can joy privileges offered by Leading Hotels of the World, Atlantis the Palm, Dubai, and Air France-KLM and other offerings like Thursday night movie premieres, complimentary tee-offs at championship golf courses across the world and premium privileges across travel, shopping, wellness and entertainment, the statement said.
Click to Apply for ICICI Credit Card Online

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.

Making card transactions goes more secure in Future

When we swipe our card at shopping malls and restaurants or use it at the ATM to withdraw cash and pay utility bills, we are under the constant threat of our cards being counterfeited. Besides, if you lose your card, someone can misuse the time lag, between your losing and blocking the card, to swipe and imitate your signature at the point of sale (POS).

• What you can do

This mandate implies that more banks would come out with chip-based cards and they would look at including more customers, rather than offering it to a select category.
State Bank of India, for example, since mid–2011, offers EMV chip credit card to almost all its new customers.
If you are an existing SBI Card customer, check with the bank. You could be entitled to a chip card on renewal.
Besides, the RBI has also said that by June 30, 2013, banks must issue EMV chip and PIN-based credit/debit cards to customers who have made at least one purchase using their debit/credit card in a foreign location.
Three, if you are a customer of a bank that currently issues chip cards, visit your branch. If you have a credit card with dated credit limits or a higher average balance which entitles you to a debit card with enhanced features, you may be eligible for an upgrade to a chip card.
Going by the guidelines, the infrastructure is expected to catch up quickly too. In fact the working group report (May 2011) mentions that about 90 per cent of the POS terminals are already chip-ready.
Says Dhruv Shah, Product Manager, Electracard Services, “While EMV-supporting ATMs are not yet available in India, switches, which drive the transaction processing at ATMs, are already geared to support EMV transactions.”
Moreover, as EMV adoption rates vary worldwide, none of the issuers give you cards that are only chip-based.
All chip cards contain the magnetic stripe at the back. So, while an EMV-compliant machine will use the chip, a non-EMV machine can still process your transaction using the magnetic stripe.
That way, at least some of your transactions will be more secure.
Plastic money has made life much easier for all of us. But unless we have had a personal experience, we don't realize how much of a security nightmare it can be. Here are a few things that will make our card transactions more secure.

• Chip cards reduce risk

Both these risks can be reduced to a great extent if you use cards that are ‘chip' based rather than ‘magnetic stripe' based and cards that require a PIN to be entered at POS terminals.
Unlike magnetic stripe cards, chip cards (also called EMV cards) use superior technology that helps guard against skimming and cloning. PIN requirement at POS terminals brings in a second layer of authentication, making misuse of stolen cards difficult.

Banks, Nabard, insurance companies - District Inclusion Plans

Credit cards are set to become an integral part of a new countrywide financial inclusion drive that will pitch gram panchayats as the basic planning unit for delivery of financial services.
The finance ministry has drawn up a comprehensive plan that requires banks to provide a kisan credit card to every farmer and a general purpose card to other households.
The plan, sent earlier this week to the heads of all public and private banks and regional rural banks, envisages a bottom-up financial inclusion drive starting at the district level.
The directive makes it clear that every household must have a bank account, credit card (kisan credit card for farmers and general credit card for others), micro-insurance and micro-pension scheme.
The country has nearly 140 million rural households, most of which do not have credit cards. If all these households were to be issued a card, it will substantially add to the credit card numbers, currently pegged at 17 million.
"It is a dangerous idea as credit cards are unsecured loans and are at times used for usurious consumption," said a senior banker, requesting anonymity.
Most banks are in the process of tightening their credit card operations, which have resulted in the total number of cards declining sharply from the peak of 28 million in 2007-08.
The emphasis of the financial inclusion drive will now change from the village to gram panchayat level, as that has become the basic planning unit for the various government schemes.
"As gram panchayats are at the centre of various developmental and welfare schemes and will play an important role in the electronic benefit transfer, service area of the banks needs to be defined in terms of the gram panchayats," the directive says.
Each gram panchayat will have a designated bank that will be responsible for the coordination and delivery of the various financial services in that area.
District-level officials of banks, insurance companies and Nabard will prepare a comprehensive financial inclusion plan for each district.
All underbanked districts will have, at least, one branch for areas with population exceeding 5,000 by September 2012. These branches will have only two officials and an ATM to begin with.
At least one branch should be available at a radial distance of 5 km in the underbanked districts.
In habitations without branches, banking correspondents will have to provide financial services with each correspondent dealing with 1,000-1,500 households for them to be viable.
The plan also mandates that government benefits must be transferred electronically into the accounts of the beneficiaries in the areas covered under the financial inclusion drive.
The lead banks have to work out a road map for Electronic Benefit Transfer in respect of each of the 32 government schemes, including the flagship Mahatma Gandhi National Rural Employment Guarantee Act, which involve some sort of financial transfer.
The Reserve Bank of India has already issued guidelines on Electronic Benefit Transfer and its convergence with the financial inclusion plan.
(Source - Economic Times)

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.

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.

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.

Number of credit card holders slips to 18.3 mn in March: Fewer swipes

The number of credit cards in circulation fell below the 20-million mark in March, as issuers continued to cull inactive and defaulting accounts and focus instead on increasing spends.
The country’s credit card population fell to 18.3 million as of end-March from a peak base of 28.3 million in April 2008, according to data released by the Reserve Bank of India. In the last financial year, 6.04 million cards were put out of circulation. This is in addition to nearly 3.61 million credit cards being cancelled in 2008-09. So, over two years, nearly 10 million cards have gone out of circulation.
This is the first time since August 2006 that the credit card population has declined below 20 million.
As the economy slid into a downturn, unsecured portfolios of banks such as credit cards and personal loans were severely affected. As part of a firefighting exercise, banks began to cancel inactive cards and close accounts they feared would default. The country’s largest private sector lender, ICICI Bank, cut its base from a peak of more than eight million to about five million at present. Late entrants into the credit card space such as Barclays Bank and Axis Bank were also affected.
However, issuers have since become optimistic and have resumed new card issues from the second half of 2009, while simultaneously culling inactive and defaulting accounts. Some like HDFC Bank remained bullish and continue to issue 70-80,000 cards every month. HDFC credit cards has the second largest card network in the country, with 4.3 million cards as of March 31.
Rather than increase the numbers of cards, issuers are trying to increase the spending on each. Standard Chartered Bank has seen its monthly credit card spending increase from Rs 250 crore last year to Rs 400 crore. “We are aiming for a target of Rs 500 crore per month soon. Ours is a highly rewards-driven programme, concentrating on what works with customers,” said Shyamal Saxena, general manager of retail banking at StanChart.
The focus on getting fewer customers to spend more is reflected in the numbers. According to RBI data, customers spent an average of Rs 2,685.97 per transaction in 2009-10, up from Rs 2,518.4 in 2008-09. In 2007-08, customers spent an average of Rs 2,540.9 per swipe.
Bankers say the market has also shifted towards the high-end, less susceptible to delinquencies. “The focus for the last three years has been the premium segment and losses from this segment are significantly less than from other segments,” said a senior executive of a large foreign bank.
While the pool of premium customers is much smaller than the mass segment, high-end customers make up by spending more. “I would prefer to have 5,000 high-end customers rather than 20,000 premium segment customers,” the executive added.

20 lakh credit cards flushed out by March 31: Banks

Around 20.35 lakh credit cards will be flushed out of the system by March-end, according to a study done by Venture Infotek, India’s leading payment solutions provider. It has shown a sharp drop to 226.64 lakh cards by March-end, from 246.99 lakh cards as on March 2009, says the report titled ‘Payment Card Industry 2009’.

On the flip side, banks will increase their debit card count by 358.44 lakh cards to end the year with 1,732.75 lakh debit cards, says the study.

Leading the bandwagon to reduce credit card count is ICICI Bank, which will cut close to 15 lakh credit cards by the end of the financial year — to 55 lakh cards from 70 lakh as on March 2009.

The report, published annually, shows other leading banks too are reducing their credit card counts. While State Bank of India is slashing its credit card count from 27 lakh to 25 lakh, Citibank is reducing it from 25 lakh to 18 lakh. ABN Amro will reduce its card count from 13.05 lakh to 10 lakh while Standard Chartered will slash it from 13 lakh to 11 lakh by the end of present financial year.

“Banks have realised that it is not easy to run a credit card business in this country as losses for some of the leading players had peaked to almost 30-35 per cent in the past. Hence, most banks are reducing their credit card exposure,” said Abizer Diwanji, an executive director (banking) with KPMG.

While there is a sharp drop in the total number of credit cards, some banks such as HDFC Bank, HSBC, Barclays credit card, Axis Bank and Canara Bank are being gung ho about increasing their credit card portfolios. According to the report, around 9.77 lakh cards will be added by these five banks.
Interestingly, all banks have seen a surge in their debit card portfolios. “The industry is expected to add around 358.44 lakh debit cards by the end of the present financial year,” the report said. SBI, ICICI Bank,

Axis Bank, HDFC Bank and Punjab National Bank are among the leading banks that are likely to see biggest surge in their debit card portfolios.

According to the head of cards with a leading private bank, the surge in debit cards is mainly on the back of a rise in the number of new accounts.

To drive their transaction banking business, Indian banks have been aggressive about adding ATMs in the country. All the 39 banks covered under the survey are together expected to increase ATM counts in the country to 58,850 by the end of March 2010.

“ATMs are expected to grow by 35 per cent during 2009-10 while SBI alone is expected to add close to 9,000 ATMs,” the report says.