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.

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.

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.

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.

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.

How to protect yourself from credit card fraud

There is some good news in your inbox. Your wait for a tax refund is finally over. At least that is what the mail says: "The Reserve Bank of India will take full responsibility of your tax refund to your bank account. Please select your bank and complete the refund request carefully." All you have to do is to open the link, key in your name, credit card number and code number at the back of the card and you will get the refund immediately, it says.
Wait a minute... Tax refund from the RBI? Credit card details for a refund? If these questions didn't crop up in your mind, you may have fallen victim to Net fraud. The RBI or the Income Tax Department never ask for your PIN, passwords or credit card details. So, the next time you see such a mail, press the delete button.
Apart from such fake mails from the RBI and IT Department, Netizens regularly receive mails that tell them about jackpot prizes they have won and ask for bank or credit card details to transfer millions. There are also mails from people stranded abroad while on a holiday and in urgent need of money. "In the faceless, new era of banking, a customer's identification is done through his user ID and password. This has brought new vulnerabilities as anybody who possesses these can transact on his behalf," says RVS Sridhar, president, IT & RBO, Axis Bank.
Frauds in India
The most common Net attacks are phishing (fraudulent e-mails) and vishing (fake voice messages and phone calls), data leaks while a card is inserted or swiped on a machine and copying of the personal identification number (PIN). "In India, data loss through cyber attacks decreased sharply in 2010, but the total number of breaches was higher than ever. Fraudsters are not attacking a single individual and getting data, but are spreading the attacks. They are using the same attack message and getting multiple data without a lot of effort," says Jelle Niemantsverdrie, principal consultant, forensics and investigative response, EMEA Verizon Business Security Solutions. Click to Apply for Credit Cards Online
Stealing information through counterfiet cards is also rampant. The data on the magnetic strip is electronically copied on to another card and used without the cardholder's knowledge. The modus operandi is very sophisticated. "A magnetic card reader is installed over the card slot, while a surveillance camera observes the user's PIN," says Rakesh Aulaya, PR manager, South Asia Pacific, NCR, an ATM manufacturer. Though this is common while travelling overseas, it can also happen at domestic ATMs.
ATMs are more vulnerable because banks and other intermediaries have been mandated to increase security in other channels, such as online banking and plastic money usage. Says Uttam Nayak, country manager, Visa: "ATMs have poor security at the location and some controls on other platforms are missing."

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%.

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.

Credit card transactions spike in January

Transactions worth Rs. 6,934.65 crore were carried out in India through credit card in January, 2011, growth of 27.82 % from that in the same period last year.
Credit card transactions during January, 2010 were at Rs. 5,425.51 crore, according to the RBI data.
The number of credit cards in circulation have, however, declined by over 10 % to 1.81 crore as on January 31, 2011, from 2.02 crore in the same period last year.
During the April-January period of the fiscal, the total transactions carried out via credit cards increased 21.78 % to Rs. 62,335.44 crore as against Rs. 51,188.94 crore in the April-January period of 2010-11.
Meanwhile, debit card transactions in January were up by 49.04 % to Rs. 3,712.67 crore, as against Rs. 2,491 crore in the corresponding month last year.
There were 21.82 crore debit cards in use in the country as on January 31, 2011, up over 25 % over the figure of 17.41 crore in the year-ago period.
In April-January period, the total transactions carried out by debit cards jumped by 47.06 %, to Rs. 32,029.24 crore, from Rs. 21,779.83 crore in the first 10 months of the last fiscal.

American Express Profit Rises 71%

American Express Co.'s third-quarter profits soared 71% as customers increased their spending by 14%, and receding losses from souring card loans allowed the company to squirrel away less for a rainy day.

AMEX’s results offer an insight into the rising optimism of its borrowers—mostly well-heeled consumers and companies—as the economy stabilize despite stubbornly high unemployment. The company's performance also cements the turnaround in the credit-card industry.

Like many banks that reported earnings recently, American Express is benefiting from fewer losses on bad loans, but struggling with weak demand for new loans that would lift revenue.

Lending volumes "remain below prerecessionary levels as card members continued to manage their finances carefully and pay down outstanding debt," Kenneth I. Chenault, AMEX’s chief executive, said in a statement.

AmEx shares, which were up 54 cents, or 1.4%, to $40.27 in trading on the New York Stock Exchange, fell 0.9% to $39.90 in after-hours trading.

American Express issues charge cards, which must be paid off each month, as well as credit cards that allow customers to carry a balance. Unlike most other card companies, which either lend or process the transactions, AmEx does both. Therefore, a big chunk of its revenue comes from fees it charges banks and merchants, such as grocery stores or gasoline stations, to process card payments.

AmEx reported third quarter net income of $1.09 billion, or 90 cents a share, up from $640 million, or 53 cents a share, a year earlier. Analysts polled by Thomson Reuters forecast earnings of 86 cents on $6.8 billion in revenue.

The company's U.S. card business reported net income of $595 million in the third quarter, up from $158 million a year earlier.

Lower delinquencies, a gauge of future losses, allowed New York-based AmEx to squirrel away $373 million for potential losses, down 68% from last year's third quarter. American Express reduced its reserve for losses by $959 million in the latest quarter, boosting income. For the time being, lower card balances will likely be offset by reduced loan-loss reserves.

For the quarter ended Sep. 30, the company wrote off 5.2% of its U.S. card loans, down from 6.2% in the second quarter and 8.9% in last year's third quarter. Meanwhile, 2.5% of the company's U.S. cardholders were a month behind on their payments, an improvement from 2.7% as of Jun. 30 and 4.1% a year ago.

During the recession, consumer spending slowed, eating into AmEx's transaction fees. The more cardholders charge on their AmEx plastic, the more the company earns by way of fees.

AmEx's revenue rose 17% to $7 billion, aided by the implementation of a new accounting rule requiring companies to bring their off-the-books securitized loans on to their balance sheets in fiscal 2010, and higher cardholder spending. This was offset by lower U.S. card balances, which fell 7% from a year ago to $49.1 billion.

Credit Card Offers For the Month of March 2010

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Barclays Credit Card Offers
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•           Buy 2Thalis and get third one free at Rajdhani.(offer valid till 30 April 2010 & at Chembur, near TBZ, Mumbai Central Railway Station,MG Road,Mulund West and at Crawford Market ).
•           Hyderabad
•           10% discount on food at Haveli.(offer valid till 31 May 2010)
•           15% discount on food & beverages at Bottle & Chimney(offer valid till 31 May 2010)
•           Buy 2Thalis and get third one free at Rajdhani.(offer valid till 30 April 2010 & at Amerpeet ).
•           Get 15% off on food & 10% off on liquor at Padharo(offer valid till 31 May 2010).
•           Bangalore
•           Get 15% discount on bill of more than Rs.400 at Yo! China.(offer valid till 31 March 2010 and at Outer Ring Road outlet, Koramangala outlet and at Kammanahalli outlet).
Shopping Offers :
•           Get 15% discount from Tantra on purchase of 3 T-shirts.(offer valid till 30th April 2010).
•           Get 10% discount on a minimum purchase of Rs.2500 from Flying Machine.(offer valid till 30th April 2010)
•           Get 10% discount on Durian Furniture.(offer valid till 30th April 2010)
•           Get 20% discount at Cygnus.(offer valid till 30th April 2010).
•           Get 15% discount on Usha Lexus Furniture.(offer valid till 31st October 2010).
Travel Offers :
•           Get 10% discount on holiday packages at Fortune Hotels.(offer valid till 31st March 2010)
Reward Points Offers :
•           Earn 2 reward points on every spends of Rs.100.
SBI Credit Card Offers
1) SBI Platinum Credit Card
Dinning Offer :
•           Get 20% off at Costa Coffee outlets.
Travel Offers :
•           Enjoy a cashback of Rs1,500 on hotel booking & holiday booking through Makemytrip.com, just tell the coupon code ?SBICPSL?.
Petrol Offers :
•           Fuel surcharge wavier on transaction above Rs.500 and up to Rs.4,000.
Reward Points Offers :
•           Get 2% cashback on International spends.
•           Earn 1 power point on every spend of Rs.50.
Other Offers :
•           Get exclusive discount at Fortis network hospital across the country - Till 31st August 2010
•           a) Get up to 50% discount on special health check package.
•           b) 10% discount on preventive health check package, OPD consultations, pathological investigations & radiological diagnostics.
•           c) 10% discount on In-hospital charges like room rent.
•           Use SBI platinum credit card at Apollo Health & Lifestyle Clinics - Offer valid till 31st Aug 2010
•           a) Get 50% discount on special health packages worth Rs.9,000.
•           b) Get 10% discount on Standard Apollo Health Check-ups.
•           c) Get 15% discount on Diagnostics.
2) SBI Gold Credit Card
Dinning Offer :
•           Get 20% off at Costa Coffee outlets.
Shopping Offers :
•           Get 2% cash back at departmental stores and grocery stores.
•           Tanishq offer 6% off on Diamond Jewellery and 15% off on making charges of plain gold jewellery (till 31st May 2010).
Travel Offers :
•           Get fabulous offers at Yatra.com
•           a)20% off on domestic holiday & hotel booking.
•           b)Rs.5000 off on European destinations.
•           c)Rs.2,000 off on all Eastern destination holidays.
•           Rs.200 off on all domestic Airline Tickets.
Petrol Offers :
•           No surcharge on fuel costing Rs.500 to Rs.3000 across all petrol pumps.
Reward Points Offers :
•           Get up to 50% bonus on reward point conversion to JPMiles, in between 01 Jan 2010 to 31 March 2010.
•           a) Get up to 25% bonus on conversion up to 5500 JPMiles.
•           b) Get up to 50% bonus on conversion above 5500 JPMiles.
3) SBI Silver Credit Card
Dinning Offer :
•           Get 20% off at Costa Coffee outlets.
Shopping Offers :
•           Get 2% cashback at departmental stores and grocery stores.
Petrol Offers :
•           No surcharge on fuel costing Rs.500 to Rs.3000 across all petrol pumps.
From: www.deal4loans.com
Disclaimer: The above information is collected from various sources. Deal4loans.com is not responsible for any sudden change in the offers

Dangerous substances can now be conveyed from CRZs

The Supreme Court stated last week that hazardous substances could be conveyed from coastal regulation zones (CRZ) to industrial units, though an amendment to the CRZ rules totally prohibited any such movement. The 1997 amendment to a central government notification of 1991 on carrying hazardous substances from ports to the industrial units was not “happily worded”, the court said. In order to make the rule workable, the court re-interpreted the vague phrases to enable industries to carry imported hazardous substances from ports to their factories.
The court did so while dismissing environmental objections to a Rs 600 crore plant in the appeal case, M. Nizamudeen vs Chemplast Sanmar Ltd. Several public interest petitions were filed by individuals in the Madras high court and the Supreme Court against the chemical plant. The Supreme Court rejected all objections based on the CRZ rules and allowed the plant to continue production. The judgment did not deal with the plea of Chemplast company that the cases were instigated by its rival, Cuddalore Powergen Corporation Limited.
IT liability on royalty paid for software duplication
The Supreme Court has allowed the appeal of the Commissioner of Income Tax in a batch of appeals from Gujarat, raising the question of tax liability in relation to payment of royalty by Indian companies to foreign ones for duplicating software in India and supplying them to the end-users. In one typical case, Mastek Ltd claimed deduction on the royalty payment under Section 37 of the Income Tax Act. It argued that for each copy duplicated and sold to customers in India (including Reliance Industries and Air India), it had paid royalty to the US corporation based on its sale value and, thus, such payment towards royalty formed part of the expenditure incurred by it in making the sales.
The assessing officer did not agree with it and asserted that only one-sixth of the payment was deductible under Section 35A. When the company appealed, the Commissioner (Appeals) and the appellate tribunal accepted the company’s view. The Gujarat high court did not re-examine the issue. The Supreme Court remanded the case to the high court as “we are of the view that an in-depth exercise needs to be carried out to understand the actual process undertaken by the company in the light of the contract/arrangement with the US corporation.”
Credit card holder in the clear
A credit card holder who has not used his card could still move a consumer forum if there is deficiency in service of the bank which issued the card. The West Bengal State Consumer Commission said so last week in the case, Abhijit Sarkar vs SBI Cards and Payments Services (P) Ltd. The credit card holder had not used the card but substantial amounts were debited by State Bank of India from his account due to operations of miscreants.
When he moved the district consumer forum, it dismissed the complaint observing that since he had not used the card, he was not a consumer according to the Consumer Protection Act. It also stated that he had filed a first information report with the police regarding the transactions and therefore he could not move the consumer forum. He appealed to the state commission, which took a view favourable to him on both counts. It stated that filing of an FIR would not debar the person from moving the consumer forum. Moreover, even if he had not used his card, he would still be a consumer in the eye of the law.

Credit crisis or not, card cos to succeed

The first Diners Club credit card was unveiled back in February 1950. The Diners Club card, used mainly for travel and entertainment purposes, became the first credit card for widespread use and eventually changed the way consumers make purchases. Sixty years later, what is the state and the future of the credit card industry?
Despite the ‘credit crisis’ of 2008, not much has been said about credit card companies and their role as capital providers to individuals and households. Banks were the culprits, but also the victims of the largest drop in stock market indices in decades. Yet, the stock price performance of credit card companies which are publicly traded (Amex, Mastercard and Visa) has been impressive.
Since April 2008, with the S&P 500 index losing almost 33% on a cumulative basis, all three companies have out-performed the market.
The market performance of credit card companies is not surprising. While the reduction of interest rates due to the recession has allowed financial institutions to lower their borrowing costs and therefore emerge almost harmless from the crisis, individual consumers and households seem to have not enjoyed such a favourable environment. Indeed, Visa’s net operating income in FY09 was $2 billion, up 13% from the previous year.
A credit card company is only a network of processing services, by which issuers and acquirers transfer payment from the cardholder to the merchant. In the process, merchants pay fees for the payment processing, and cardholders pay interest on their credit card balances. This is a very profitable business model, but it would be a mistake to assume that credit card companies issue credit cards. Nor do they determine the rates they charge to customers, or the fees that merchants pay to acquirers.
Visa, Mastercard and AMEX make money from fees that issuers and acquirers pay. Such a profit generating system translates into an atypical balance sheet structure. Mastercard, for instance, is a $6.4 billion company (at the end of 2008), of which $4.3 billion are cash and other liquid assets, $700 million are intangibles, and $500 million are deferred income taxes. On the liabilities side, the company has virtually no debt, and it is financed mostly by current liabilities, and $2 billion in equity. Visa is even impressive, with $20 billion in intangibles out of a total size of $32 billion, of which $8 billion are liquid assets.
Who wouldn’t want to invest in companies like these? They are swimming in cash, are extremely profitable and can sail through a financial crisis by transferring their interest rate risk to customers, issuers and acquirers. Since its IPO in 2005, the cumulative return on Mastercard stock has been more than 500%, which is equivalent to a 38% annual return.
But, unfortunately if there is something that credit card products do not need, it is investors. They are rich, do not need to finance heavy capital investments. It turns out, however, that Mastercard did go public, as did Visa, in 2008. Their reasons were non-financial. Mastercard had a severe problem of image.
Mastercard solved its problems by going public, earning a great reputation through its after-market performance and by putting most of the money raised in the IPO in a foundation. Visa had to create an escrow account that would cover litigation (some $3 billion) started against the company by Discover and Amex, among others. Their public offerings were among the most successful of the recent years.
What would happen though if, as some commentators say, the next financial crisis is a personal credit crisis? First of all, such a crisis seems now further away than ever. With low-interest rates and social pressure, a household credit crisis would be the last event that any government could now afford.
Additionally, I hope this article clarifies that it would not be the credit card companies that would suffer the most — they are cash shielded, do not get directly impacted by the default of the final customer and are owned by banks, which are by far healthier than two years ago. There is little reason to doubt that the first credit card launched 60 years ago will not continue to thrive and be a part of our every day lives for the decades ahead

ABN Amro cuts credit cards Limit

ABN Amro India has cut the credit limit of some credit card customers to a tenth and raised the minimum amount payable to 7% of total dues from 5%, possibly to persuade them to surrender their Credit Cards as it draws closer to selling its retail operations to UK’s Hong Kong and Shanghai Banking Corp (HSBC).
ABN Amro, owned by UK’s troubled Royal Bank of Scotland, or RBS, has also decided to freeze fresh retail lending, including credit card and personal loans, to arrest a pile-up of bad loans, two people familiar with the matter told ET.
One of them, a senior bank executive, said even at the peak of the financial crisis, ABN Amro did not resort to such drastic cuts.
An ABN Amro spokesperson called the move a standard industry practice. "As a responsible lender, we review card limits and take appropriate action on an ongoing basis to protect our customers and manage risk," she replied by email.
Although ABN Amro had no comment on the number of credit card users, a person familiar with ABN Amro’s operations said it has more than 4 lakh active credit card users. The bank’s strategy, he said, could be to discourage users and get them to give up their cards or reduce their credit exposure.
ABN Amro has been up against a large number of employee exits to competitors after the deal with HSBC came to light. It has also laid of some of its employees in the credit card and personal loan departments.
Currently, the bank has around 2,854 employees, down from 3,300 in early 2008. About 2,500 are in the retail and commercial banking department. It has another 8,500 in its two outsourcing arms.

Credit cards related complaints increased in 2008-2009

The report said RBI has started taking ‘class action’, by issuing general directions to all banks to protect their customers. Such general directions are issued by the controller in cases that could benefit not only the applicant, but all those consumers similarly placed without having to move toward their respective banks.

The report said RBI has initiated class action against a foreign bank regarding the mode of calculation of interest rates on deposit accounts. A PSU bank was advised to recalculate interest rate on all housing loans as per terms of agreement entered into with all the borrowers without their application for relief. Yet another PSU bank was asked to recredit insurance premium that was debited to savings bank account holders without their agreement under the group insurance scheme.

Customer complaints relating to credit cards amounted to 17,648, comprising 26% of the total complaints in 2008-09 and up 74% from the previous year. However, it may be noted that the user base of credit cards rose during 2008-09 — from 137.2 million to 170 million, up 24%. RBI pointed out “that does obviate the need for better service and transparency at the point of sales by banks”.

The types of complaints pertaining to credit cards continue to be those related to issuance of unsolicited credit cards and insurance plans forced on cardholders for which customers are subsequently billed. There are also complaints where customers were offered free cards and subsequently billed annual charges for them. Other complaints include the bank’s inability to write off the card balance against the credit insurance cover after the cardholder’s demise.

A general source of these complaints continues to be difficulty in accessing the credit card issuers and the poor response from the call centres.