Banks officials, cops find difficulty in solving fake credit card cases

The city bank officials are finding difficulty in solving fake credit card cases. According to banks the central crime branch of the city police who have some technical expertise in handling these cases but is not fully equipped to track fake credit card cases. The accused arrested in such cases are generally the ones used by the racketeers for purchasing goods using fake credit cards. The main masterminds are absconding.

There has been rise in complaints about fake credit cards therefore banks have started fraud prevention training program for all card-accepting merchants in the city to educate them on differentiating between a fake credit card and a genuine one.

"We are providing training to all card-accepting merchants in a phased manner and plan to cover all the merchants in the city in a year's time. We tell them how to identify a fake card from an original one. Credit cards have security features which are difficult to duplicate. They are also told how to observe the customer's behavior, and if they have any suspicion, how to contact the bank without letting the customer know about it," the official added.

After taking up this training, recently a merchant in Chennai was able to trap a youth easily who had come to purchase consumer goods using a fake card in September. "The youth was carrying an SBI card with a magnetic strip that contained the credit card data of a foreign card. The merchant cross-checked it with the bank and called the police. The youth was arrested, but the masterminds are yet to be traced and arrested," the official said.

Bank officials of credit card fraud investigation wing said fake credit card case investigation is a very cumbersome process. "We have to identify where the card details had been skimmed from. So we ask the customer to provide details of all the recent transactions he had made. In most cases, we get a foreign merchant address among the last few transactions and we presume that the card data could have been stolen from there," an official from the card fraud investigation wing of a private bank said.

”It is difficult to physically visit all the merchants involved in billing as they would be spread across the country or even abroad. So, police do not show much enthusiasm in following up the case. The maximum they do is arrest the runners. Masterminds behind the racket, which is thriving in Chennai, are still carrying on with the business," he said.

On enquiring from M Paneerselvam, assistant commissioner, bank fraud wing, CCB, he replied, "We have limitations in counterfeit card case investigations as the masterminds are usually based in foreign countries. Most often the misused data belong to credit cards of foreign nationals and it is difficult for us to get his version. There usually would not be a complaint. The hands of foreign nationals are involved in stealing of data from Chennai customers as in most cases the data would have been skimmed in a foreign country."

He informed that police is able to arrest only the small fraudsters who use the fake cards for purchase in the city.

Earlier in November, the credit card details of a leading bank’s assistant general manager in Chennai were misused. Someone had booked the flight ticket from Hyderabad to Kochi by using his credit card details. The bank officials were able to track about the misuse and two persons were arrested at the Kochi airport with the help of police.

In November one more case came into limelight where the credit card wing of a private bank came to know of a credit card misuse in Coimbatore and, with the help of police, a runner was arrested. The prime mastermind behind the scam, with the help of the arrested accused had purchased goods worth more than Rs 50 lakh using credit cards.

A bank official informed, "We handed over the accused to B4 police station in Coimbatore, but they did not arrest him. He was let off after recording a statement".

Pune in top in credit card fraud list

All over the world credit card frauds are increasing, but in India Pune is on the top.

On Saturday at ClubHack 2008 – the international convention of hackers was organized in Pune. While speaking at the convention on “Economic Offences through Credit Card Frauds Dissected” Harshad Patil, computer security expert told Pune has been the worst victim of credit card fraud in the country in 2007-08.

In an interview Patil told The Indian Express, “As per a survey by Google on credit card frauds in the world, Pune suffered the most in India with Mumbai coming second. Lack of awareness among card users is the major reason for the significant rise in the frauds”.

He added, “There is an international racket of cyber criminals. Credit card information in India is sold to cyber criminals in other countries. The information is misused for carrying out major financial frauds”.

He further said, “There are various ways like phishing, pharming, skimming and dumpster diving by which money can be extracted from your credit card. Due to lack of awareness, people submit personal details and credit card information to fraudulent emails. Sometimes, fraudsters steal credit card information. Some fraudsters go through trash to find discarded receipts or carbon for obtaining information and then use the account number illegally”.

He informed there were secretive “carder” forums where credit card numbers are bought and sold. These forums bring together people who steal the numbers and those who use them. Patil an individual researcher in cyber crime and cyber laws said economic offences using credit cards have increased in India and countries like US. According to FBI report that credit cards were largely responsible for the $ 315 billion loss the US underwent from financial fraud in 2005. As per study carried out in Europe over 22 million customers had fallen victim to credit card fraud in 2006. “The numbers are increasing,” said Patil.

“The frauds are increasing because of problem faced in extradition of cyber criminals from other countries,” he added. During the panel discussion on cyber terrorism at the hacker’s convention, cyber law expert Rohas Nagpal pointed out India is so far not associated with any extradition treaty with a foreign country due to which the cyber criminals in country can not be held. US expert Chris Goggans said even US is facing difficulties in extradition of criminals.

New credit card technology for secure online transactions

Online transactions are becoming more and more unsecured as credit card fraudsters are none other than computer experts. For online transactions you use password but this password is no longer safe therefore to keep off the hackers into your mail accounts you can have another password.

Dr Shekhar Kirani, Vice-President of Verisign Services India Private Limited, in an interview told Business Line, “With hackers and mischief mongers breaking into mail accounts and sniffing transaction details, it is better to have the second password, or the Second Factor, to thwart their attacks.”

Dr Kirani had come to Hyderabad to take part in the two-day data security conference organized by theb National Association of Software and Services Companies last week.

Verisign, is a global leader in providing secure online solutions, is developing a credit-card sized Second Factor tokens to be launched in the Indian market.

In this process each time a user presses a thumb-sized mark on the card, he or she will get a six-digit number that will work as a second password. “The card can produce n-number of such passwords, exclusive to the user whose identity would be known to the bank’s transaction mechanism via the Verisign database,” he said.

Currently company is having talks with various banks and financial institutes to introduce the card. He further added, “As the usage increases, the same card could be used to generate multiple Second Factor passwords for different banks”.

He informed, “We are in talks with 150 banks, small and big, in India. Talks with 30 are in advanced stage”.

The inimitability about the technology is that the password created will stay for just 30 seconds.

He explained, “This will thwart remote access to passwords of bank accounts and other e-commerce sites. If hackers sitting in remote areas still want to break into your accounts, they need to physically steal the token cards that contain the other password. This, in fact, reduces the probability of hacking”.

Credit Repair Free of Cost – How Can You Gain the Knowledge?

Acquiring knowledge about how to do credit repair without any cost is not as difficult as it seems. However, it would require a little bit of time and a zeal to know. One of the most suitable methods to know about free of cost credit repair is through becoming a member of a credit repair forum. Usually, membership of these forums is available without any fees, but there may be one or two forums which can ask for a membership fee.

Even though there are numerous websites that are ready to impart free credit repair education to you, the most advantageous attribute of a credit repair forum is that the members of such forums create the content and they do not have any commercial purpose. Majority of the members are present there either to assist you or are looking for replies to the queries that they have.

One more positive aspect regarding credit repair education offered by a credit repair forum is obtaining different types of views. You would normally have an idea on how the majority of people think about a particular subject matter while you inquire about something at the credit repair forum. The queries that are more elaborate in nature typically get one or two replies. You should constantly keep in your mind that you must analyze and judge the consultation that you receive from a forum prior to executing it.

On the contrary, for those people who want to study a book on credit repair, going to the local library would be of tremendous help for getting the knowledge on repairing credit. There are multiple modes to acquire knowledge about how to better your credit and they even come to you free of cost. The most significant factor is to save time for doing it and ensuring that it is learnt comprehensively since making a start for credit repair without having an idea what you are going to do may spoil your credit even more.

Auto rickshaws to be upgraded pay with your credit card

Preparations are on full swing for the forthcoming Commonwealth Games to be held in 2010. During that time autos will be just a call away. Moreover the autos are being upgraded so that the passengers can swipe their credit cards for making payment as the renovated autos will be equipped with many facilities, including newspapers and water bottles, for the comfort and safety of passengers.

Auto rickshaw popularly known as “common man's radio taxi", the Urban Development Ministry as a pilot project, first of its kind in the country, equipping auto rickshaws with GPS-based systems is launching in Pune on November 29.

Under this project, the commuters can call a control room or send SMS for hiring autos and they will get a receipt after paying the prescribed fare.

"The project aims to provide safer last mile connectivity to passengers. Many cities including Delhi have shown interest in the project," Urban Development Secretary M Ramachandran told PTI.

The Urban Development Ministry is having discussions with different states as part of the national urban transport policy to offer better and comfortable mode of transportation to commuters.

In view of the forthcoming Commonwealth Games, the Ministry is having talks with the Delhi government for the introduction of GPS-based auto rickshaws in the capital before October 2010.

While explaining the salient features of the project, Ramachandran said, "This is a scientific management of auto rickshaws. Since the movement of autos will be monitored by the control room and there will be very little scope of overcharging by drivers, the scheme will be beneficial for commuters especially for elderly and women."

Barclays and British Airways together launched airline - linked credit card

Barclays bank in partnership with British Airways (BA) earlier this week launched the British Airways Barclaycard in collaboration with MasterCard Worldwide. The new card will be acceptable across the MasterCard global network with 27.3 million acceptance locations around the world, which include more than 1.9 million ATM locations worldwide. The card has been designed for the frequent travelers. The British Airways Barclaycard is the end result of a unique partnership between Barclays, British Airways and MasterCard, under which an exclusive offer in-the-air and on-the-ground travel perks, is being given.

Michael Miebach, Managing Director, Barclays Global Retail and Commercial Banking, Middle East and North Africa (MENA) said, “Barclays undertook extensive consumer research before launching this product, with results showcasing that the majority of credit card users are looking for a card that combines great on-the-ground privileges along with reward miles. We firmly believe that the new British Airways Barclaycard offers customers unparalleled rewards, getting them set and on their way to their next holiday faster. As one of the leading airlines in the world, partnering with British Airways was an obvious choice for Barclays when deciding to launch an airline-linked credit card.”

He further added that British Airways' has a reputation for providing excellent service, together with their extensive route network, is best for the success of the British Airways Barclaycard. Besides, MasterCard's global payment network guarantees that the card can be used anywhere at any time. “We are delighted to have both British Airways and MasterCard on board and anticipate that the British Airways Barclaycard will achieve significant results for all parties,” said Miebach.

Barclay bank has been giving choice to its customers therefore there will be two variants of the British Airways Barclaycard being offered - Priority and Prestige - depending on the customer's travel and value needs. Varied benefits are being offered under the cards although on both the cards the customers will be able to accumulate BA Miles each time they use the card. On Priority card customers will get 0.75 BA Miles for each USD 1.25 spent, with Prestige cardholders receiving one BA Mile for each USD 1.5.

The British Airways Barclaycard Priority and Prestige package is being offered to the approved customers earning over Dirham 5,000 and Dirham 12,000 per month respectively. Under the Priority British Airways Barclaycard customers are being rewarded with 5,000 BA Miles for card activation, while under the Prestige British Airways Barclaycard the customers are being awarded 10,000 BA Miles. There is one more benefit for the cardholders who utilize their card within the first three months to purchase a flight ticket on ba.com will also receive an unbelievable 20,000 bonus miles, subject to terms and conditions.

British Airways Barclaycard users will also get the benefit from membership of the British Airways Executive Club. Members of the Executive Club will be able to earn a world of travel benefits such as free flights, the opportunity to use miles to upgrade to the next cabin, and airport lounge access. Cardholders can redeemed BA Miles for reward flights on any of British Airways 145 destinations worldwide, or more than 600 destinations through the one world alliance.

Shaun Davis, Executive Club Director, Asia and Pacific, British Airways said, “We are extremely pleased to be partnering with Barclays and MasterCard to offer our existing Executive Club members the opportunity to earn extra BA Miles, as well as expand the benefits that British Airways' Executive Club offers to a wider group of customers in the UAE.”

While on the ground services the British Airways Barclaycard users will be able to enjoy an array of benefits including, one complimentary chauffer every month; a dedicated Barclaycard Butler service offering high-end concierge services; four complimentary valet parking services across the UAE; and access to over 500 VIP lounges in more than 90 countries and 275 cities worldwide (regardless of travel class). Besides, Prestige British Airways Barclaycard customers will also be awarded with one complimentary visit to the Priority Pass lounge per month and Priority customers will receive six complimentary visits per year.

Customers can apply for the British Airways Barclaycard by calling 800 Barclays or visiting a Barclays Branch.

HSBC signs Visa its brand partner for new consumer debit cards

HSBC the global banker launched debit cards for new consumer for which it has selected Visa as its brand partner. The bank will issue debit cards in about 20 countries, including India.

In a statement issued Visa President Hans Morris stated, "This deal expands the relationship between two global leaders, HSBC and Visa, in some of the fastest-growing areas in the world".

The statement also stated that the five-year regional agreement between HSBC and Visa is aimed at expansion of HSBC's current credit card issuing relationship with Visa.

After the signing up of an agreement, the bank in association with Visa will be providing debit products to new and existing customers across 20 countries including India.

According to release at present, there are approximately 847 million Visa Inc. debit cards globally; representing more than 2.1 trillion dollars in total volume till June 30 this year.

Visa is world's largest retail electronic payments network providing processing services and payment product platforms, including consumer credit, debit, prepaid and commercial payments. HSBC Asia Pacific is the founder and a principal member of the HSBC Group carrying out operations in more than 9,500 offices in 85 countries and territories.

ICICI Bank, BA in collaboration launched co-branded credit card

ICICI Bank country’s largest private sector lender in collaboration with British Airways launched a co-branded credit card called ICICI Bank British Airways American Express Credit Card. In a press released by the bank it was stated that the card will provide one of the fastest ways to earn complimentary flights on being used in India.

The release also stated that the card also offers complimentary membership to the British Airways Executive Club and attractive BA miles which can be earned on everyday spending, as well as the card will give new and existing members an opportunity to accelerate these earnings.

ICICI Bank's Head (Cards Product Group) Sachin Khandelwal said: "ICICI Bank is committed to offering its cardholders value and privileges that are the best in the industry... this strategic partnership with British Airways will introduce cardholders to a superior flying experience with the airline as well as enjoying the benefits of the one world alliance."

Corporation Bank offers cash back scheme on all cards

Corporation bank this festival season has launched a cash back scheme on its debit, credit and campus cards. The scheme is for a period of 100 days.

All the Corp Bank debit cardholders, credit cardholders and campus cardholders are eligible for the cash back scheme. Under this scheme bank is offering a fabulous cash-back off up to 5% on the purchases made by using the Bank’s credit card, campus card and debit cards between 15^th October 2008 and 22^nd January 2009.

The offer will be valid for domestic Point of Sale and Internet transactions only. The services like ATM transactions, Funds transfer, NEFT, VISA money transfer, LIC premium payments, Mobile recharge transactions done through ATMs are not eligible for cash back.

The maximum amount eligible for cash-back is Rs.1000 (Rupees One Thousand only) per Card during the campaign. Cash back offer is for both Primary and Add-on cards but can be accumulated separately. The maximum amount per Primary card is Rs.1000, and Rs.1000 per Add-on Card.

The details about cash back percentage for different transaction amounts, conditions and other concern details are available on the Bank's website www.corpbank.in

Police arrested student recovered stolen credit cards

Police arrested one person named Gaurav Robinson of Indira nagar in connection with purchasing cell phones from a store in a shopping mall in Gomtinagar on stolen credit cards. As per police report Gaurav is pursuing his BCA.

From the accused police has recovered two cell phones that he had purchased from the stolen credit cards. The credit cards belong to Vikas Jhunjhunwala and Rakesh Verma. Police informed that during interrogation, the accused told them that he along with his another companion had snatched away the bag of a courier company employee (on September 25) which contained the credit cards which he used to purchase the cell phones. Police has also recovered the motorcycle used by the accused for executing the aforementioned loot.

Robinson further told police that in the recent past he along with two others has also been involved in several chain-snatching incidents.

Before also such incidents has happened where things have been purchased by using the stolen credit cards. Previously a couple of months ago three men were arrested by the district police in connection of purchasing electronic appliances worth lakhs on a credit card that did not belong to them.

The arrested had identified themselves as Dhirendra Singh Chauhan, Abhinav Gupta and Amit Kumar Sharma. The incident was stated by the Hazratganj police circle. As per the complaint lodged the accused in the case purchased laptops and other electronic appliances through a credit card which Amit Kumar claimed to be of his own.

On the purchase of more than Rs 10,000 done by credit card one is required to give an identification proof, therefore dealer asked Amit to present his ID proof. Amit reportedly presented a forged ID proof which aroused the suspicion in dealers mind and he informed the police. Later the three were arrested on the complaint and a case was lodged against them.

Banks to provide credit linkage to 1 lakh women SHGs

In the State Level Bankers’ Committee (SLBC) meeting a decision was taken for providing credit card linkage to more than 1lakh woman self groups (WSHGs) in the state during the current fiscal. Such loans will amount to Rs 659.63 crore.

The Commercial Co-operative and the regional rural banks (RRBs) will open 101483 WSHG accounts during the fiscal. This will be 19.56 per cent more than the last fiscal. In estimated terms it will be 45.51 per cent more than 2007-08.

Earlier during 2007-08 banks had provided credit linkage to 84,879 WSHGs involving Rs 454.1 crore. According to official sources at that time they were able to achieve 84 per cent of the physical target, 99 percent of the credit exposure target during the last fiscal.

In the meeting it was decided that the commercial banks will provide loans to 81,483 WSHGs involving an amount of Rs 529.63 crore, the regional rural banks (RRBs) are expected to provide Rs 28.15 crore loan to 35,100 WSHGs.

In addition in this fiscal, the Orissa State Co-operative Bank will also open 20,000 WSHGs credit accounts providing Rs 130 crore loan during this fiscal.

Likewise, per group investment aim of the WSHGs, has been raised to Rs 65,000 for 2008-09 compared to Rs 45,000 in 2007-08. The limit in the investment has been raised to bring in balance with the limit reached in Andhra Pradesh.

In the meeting the decision was taking to observe September, 2008 as the self help group (SHG) month in the state in order to focus on WSHG formation in the left out areas.

Every Tuesday will be assigned as the SHG day and all the rural and semi urban branches of various banks will have signboard displaying information regarding this.

The sources said all efforts will be made to maintain transparency in the operation of the Micro Finance Institutions (MFIs) and their areas of operations are to be determined.

The banks have been directed to keep check on the disbursal of the loans that they are being used for the stated objective and are not diverted for other purposes.

As sharing of the information related to the MFIs in respect of financing to SHGs, WSHGs and Joint Liability Groups is essential, the committee took the decision that all the lending institutions and the banks should share the detail information regarding the financing of MFIs and the forward lending by them to these groups.

Cannot handle credit cards go for cash or prepaid cards

Puneet Lakhotia, 27 year old bank employee had signed up for an ICICI Bank credit card. He used his card to book tickets online but none of the ticketing websites accepted his regular bank’s net-banking facility.

But instead of only booking tickets online, his expenses splurged. Within a year, he was in a debt trap. “Due to the convenience it offered, I used the credit card to pay bills and shop online for books, movies, music CDs and even bought a cell phone,” says Lakhotia. After facing this hardship, he has surrendered his credit card and keeps Itzcash, a pre-paid card for online transactions.

It is very common to hear that credit card was used for convenience. Many of them pay their restaurant and hotel bills as using a debit card involve punching the four-digit identification number. Then there are other advantages are attached to the credit cards like cash-back benefits or points that attract more expenses.

ICICI Bank, the country’s largest private sector bank has compiled a data in which it has mentioned top five expenses that consumers make through credit cards include travel and related activity (including tickets and hotel bookings), fuel refilling, consumer durables, apparel and garments and jewellery. Payment of utility bills is also fast catching up.

“Around 8-12 per cent of business comes from the top five areas. At least, 10 per cent of card-holders pay at least one of their utility bills every month through cards,” said a banker from a private sector bank.

Usually consumers do not keep up to a few expenses, but always start over-spending. For those, who cannot control their expenses from splurging, to use an alternative-payment mechanism is a better idea.

For instance, for online ticket booking pre-paid cards are best option. Three – such cards are currently available in the market — Itzcash, OxiCash and Done Cards.

These three cards can be used for a host of other purchases as well. With these cards you can do online shopping, insurance purchases, mobile recharge and many others.

Similarly to credit cards, these cash cards are also levied with cost, but only for a few transactions like railway bookings and bill payments for public sector utilities because government-owned companies do not give any commission to cash card companies. “The charges are either a maximum of Rs 15 or 1.5 per cent of the value of these transactions, whichever is higher,” said Naveen Surya, managing director, Itzcash.

On petrol bill payments, credit card companies give bonus points and a waiver of fuel surcharge of 2.5 per cent.

Substituting them with pre-paid cards from oil companies will get you the same benefits. All the three major oil companies have their own branded cards. For instance, Bharat Petroleum has a Petro Card and Hindustan Petroleum has HP-Smart 1. None of these cards attracts a surcharge and offers similar loyalty bonuses.

The customers who are enthusiast for clothing and consumer durables, most retailers on Thursday have started loyalty program that give discounts for cash purchases. The persons who can’t control their spending should go for options that require the use of more cash. It will save them from the trouble as well as a high interest payout.

Credit card holders get protection against exorbitant charges

Supreme Court ruling has brought a big relief for credit card users for the moment. The Supreme Court gave this ruling while refusing to stay a national consumer forum directive that banks cannot charge more than 30% interest per annum on defaults on card payments. After this ruling the card holders have got protection from exorbitant charges, which are as high as 49% in some cases.

Bankers had filed an appeal in Supreme Court against the consumer court order and asked for a stay on it. The appeal was filed by MNC banks — HSBC, American Express, Citibank and Standard Chartered Bank — challenging the consumer forum order. A Bench comprising Justices B N Agrawal and G S Singhvi has issued notice in this regard to Reserve Bank of India and the NGO 'Awaz', on whose petition the limit on interest rate was imposed.

What is enlightening the banks have listed as many as 27 factors why they needed to charge higher interest rates and these include calls made from service centre to seek new customers. From the list it appears that almost all costs involved in banking activities over telephone and internet are being charged from the hapless credit card holder, going by the banks' submissions to the SC.

When banks requested for a stay on the ground that they are regulated by the RBI regulation guiding interest rates, the Bench just issued notice on their applications and have asked for responses within three weeks.

But the risk of a higher interest has not gone away as the banks — HSBC, American Express, Citibank and Standard Chartered Bank — have come together to persuade the SC of what they said were their compulsions in charging between 36% and 49% interest.

While in the July 7, 2007 order the National Consumer Disputes Redressal Commission (NCDRC) had ruled that "charging of interest rates in excess of 30% per annum from credit card holders by banks for the formers failure to make full payment on the due date or paying the minimum amount due, is unfair trade practice".

It had also stated that punitive interest can be levied only once for the period of default and should not be capitalized, and also termed the practice of computing interest on monthly basis as "unfair trade practice". In the list of factors given by the banks for justifying the exorbitant rates was the cost of calls. In other words, calls made randomly by the bank's authorized call centers relentlessly to convince people to take a credit card, has been taken into account for understanding through charging of penal interest from a defaulting card holder.

The other notable factors listed by the banks are:

Processing charges for creating a new card in operating system
Courier cost and cost of embossing the card
Charges for providing phone banking service
Charges for couriering monthly statements
Charges for providing internet banking facility
Cost of waiving charges for service reasons
Charges for marketing a product and promotional offers
Charges of reward programs and loyalty program

"The National Commission has failed to appreciate that the rate of interest on defaulted or partial payments of dues is determined by taking into consideration various factors, including the risks of default, and therefore, this commission may not determine the issue as to whether the interest at the rates of 36% to 49% per annum is excessive," the banks said.

Credit card holders must read fine print to avoid freezing of credit assess

There has been decrease in the credit card holders as big banks have got strict to recover mortgage loan losses and other bad investments.

Big card issuers like American Express have already started keeping a close look as at the calculations that determines how much credit each customer is holding and some of the bigger banks have started cutting their credit lines to keep more money with them. Card issuing banks are trying their best to keep default rates as low as possible to protect their profits.

Credit-card issuers have preserved the right to change the terms of their agreements, mainly in case of defaults by customer. As per law the card issuers are required to inform cardholders of any changes to their account. But the problem is most of the customers receive notices as part of their monthly statement, and many of them pay attention on the payment portion and either ignore or throw away the message inside.

Consumer advocates suggests that the consumers should read all the fine print in their statements and in letters received from credit-card companies. They also stated that the issuers’ apparently sudden credit limitations can unnecessarily cut off consumers’ spending power. And, credit card companies change those terms without even assessing the customer’s circumstances, in turn freeze customers’ access to credit they had been awarded.

The card holders must pay the credit card bill on time so that it can prevent credit limit from being reduced. Consumer should pay more than the minimum requirement. Credit cards seem to be easy free money but actually they are short-term loans which often steep monthly interest charges.

Therefore you must try to quickly get the loan cleared off your books. Moreover, cardholders should not use more than 50% of their available credit, even when the financial position is tight. These days, when banks are getting stricter with credit card holders executing fiscally irresponsible can lower your credit limit.

Increase in transactions through debit card than credit cards

Recently credit card issuing banks have increased charges and interest rates due to which now people prefer to use debit card.

According to the records the average value of transaction through debit cards has gone up by 9.1 per cent in 2007-08 as compared to the previous year vis-à-vis four per cent growth in the average spend through credit cards.

As per the records of the Reserve Bank of India (RBI), the retail payments made through debit cards have gone up by 53.2 per cent to Rs 12,521 crore in 2007-08 as against Rs 8,172 crore in 2006-07. Even in the terms of the volume of transactions, debit cards have shown impressive growth of 46.7 per cent to 6.02 crore by the end of fiscal year on March 31, 2008.

According to RBI there has been growth in credit card payments in 2007-08, and in terms of volume and value, also there has been sharp increase at 34.6 per cent and 40.1 per cent, respectively. In 2007-08 the total value paid stood at Rs 57,958 crore and there were 22.82-crore transactions done through credit cards.

“Following the increase in interest rates, the burden of people who already have a personal, car or home loan has gone up. This has also reduced their disposable income. In this situation, some people opted for using plastic money more to purchase goods and services on credit. There are, of course, others who didn’t want to increase their interest liability and preferred to use debit cards,” said a senior official of a private sector bank.

But steep increase in the usage and average spend through credit cards, has caused piling of out standings and payment defaults on such cards. In a Indian Banks’ Association meet held on August 1, the RBI deputy governor, V. Leeladhar, said that if banks kept issuing cards without proper scrutiny of credit-worthiness of a customer, it will increase the number of defaulters.

According to the RBI, by the end of May this year the payment outstanding on credit cards has shot up 87 per cent to Rs 26,596 crore. While during the 12 months ended May 2007 the credit card outstanding had grown by 45 per cent

The growth in payments through credit cards was at variance with growth in personal and home loans between April 2007 and May 2008.

However the rise in interest rates had shown a dampening effect on growth in personal and housing loans, but did not show any adverse effect on credit cards.

Banks have shown growth of 15% in the personal loan portfolio between April 2007 and May 2008 as compared to a growth rate of 24 per cent a year ago. Even the off take of housing loans, also dropped down to around 13 per cent by May-end this year from 22 per cent last year.

CorpBank and IDenizen Smartware in a tie-up launched smartcard

Corporation Bank launched a SmartCampus, a smartcard for students. Bank has tied-up with Bangalore-based technology solutions provider IDenizen Smartware Private Limited to launch SmartCampus card. The smartcard is an enabled software package for the education vertical.

IDenizen developed SmartCampus, four years back, is a student identity card which can be used as a regular ATM-cum debit card. The card has Visa-powered radio frequency identification (RFID) which will incorporate all the key activities of an educational institute - be it payment of admission fees, monitoring students’ attendance, library automation and examination results among others - onto a single platform. The card will enable the student cardholders to carry out their financial transactions across the country easily through Corporation Bank’s 1000+ branches & ATMs an over the internet. The cardholders will also be able to access 25000+ other ATMs and 12lakh + merchants across India.

At present over 60,000 students including those from Bangalore’s R V College of Engineering are using SmartCampus cards for to carry out their cashless transactions within their respective campuses. The tie-up with IDenizen, has helped the Corporation bank widen the base of Corp New Gen, the bank’s savings account specially designed for students.

“Student community has been our focus area with regard to our customer base. We are making a lot of value additions to our products to convert our student customers from indulging in cash-spending to card-spending. With SmartCampus, students also get to recharge their pre-paid mobile phones,” Corporation Bank’s general manager B R Bhat said at a press conference here on Wednesday.

Bhat informed that bank will be offering up to Rs 10 lakh educational loans for the cardholders for those studying in India and up to Rs 20 lakh for those studying abroad. As soon as the student completes his college education the SmartCampus card will be disabled immediately and it will be replaced by a credit card, Bhat added.

IDenizen’s chief operating officer Vinod P John said SmartCampus has received good response from the colleges as it as it takes campus management to a higher level. John told no investment has to be made from college’s side; the students have to pay an annual subscription fee. To own a SmartCampus card students have to pay anywhere between Rs 700 -1,000 per annum.

IDenizen’s managing director and CEO Girish Balaga said the company is working out plans to increase SmartCampus card users to 250,000 in this fiscal and one million in the next three years.

Bank raises finance charges as high as 50% for credit card

The credit card customers will have to pay nearly 50% more as the banks in the past few days have raised the charges. Banks have raised the charges to as high as 50% per annum. The way banks are adopting methods to charge exorbitant interest rates from their customers, the neighborhood moneylenders can learn few tricks from them.

Nearly all the banks over the past few days – SBI the largest PSU bank to private sector banks like ICICI Bank and HDFC Bank and foreign players such as Deutsche Bank and HSBC, have raised the charges or in the process of raising the “finance charges”.

At present banks are charging between 35 and 50 per cent, from credit card users for payments made after credit- free period, which ranges from 15 days to two months. These charges are over three times the current benchmark prime lending rates of less than 15 per cent at most of the banks. See each 'n every credit card india information here before applying for a card.

Banks are charging high rates even though a National Consumer Disputes Redressal Commission (NCDRC) in ruling last month said, "charging of interest at rates in excess of 30 per cent per annum from the credit card holders by banks for the formers' failure to make full payment on the due date or paying the minimum amount due, is an unfair trade practice".

Besides this, these high charges, which varied between 30-40 per cent till some days back, have been mentioned only in the asterix-marked fine prints of credit card statements and there is no mention of limit to what level these could be raised.

On the other side banks exclaim that it has become necessary to raise these charges in the wake of tightened liquidity in the system and a customer has to pay after the expiry of his or her credit-free period.

While the hike in interest rate for secured lending products like auto and home loans have raised about 0.5- 1.0 per cent, whereas the unsecured credit card finance charges are being increased by about 10 per cent.

Banks plan to slow down credit card biz in smaller towns

Aftershocks of the US sub-prime lending crisis Indian banks have started going slow on the credit card businesses across the board in tier-I and tier – II cities due to a big increase in default cases during the last six months.

A senior banker informed Sunday ET that alarming increase in number of failure to pay debts is leading to card holders and collection agents conspiring to misuse credit cards india. “We recently had a case where one of our collection team agents was hand-in-glove with a card holder. It was an eye-opener in more ways than one,” the banker said.

To put a check on the rising consumer defaults and keep the situation under control, Indian credit card companies have become strict with card issuance and are also reducing credit limits for card holders with high debt burden. Credit card firms are now adopting newer ways — such as reducing credit-free limit period from 52 to 48 days and charging a fee on cash payments at bank branches for credit card dues — to recover the transaction costs. Banks have also started making reminder calls (a week before the due date) to their card holders in case the due amount is a significant sum and to make sure that the default numbers don’t rise anymore.

Here is an example how the collection agents and card holders are conspiring misuse of credit cards.

Mr A (card holder) discarded multiple credit cards after utilizing the credit limits, with the help of Mr B (a senior collection official) to whom he paid a relative sum of credit card limit. Mr B, on his part, rescued him by sitting on the fraud case, and finally closing the case mentioning no breakthrough.

This is the main reason why the latest Reserve Bank of India (RBI) figures on the credit card industry doesn’t surprise. During the January-May 23 periods this year the credit card out standings went up by an enormous 87% at Rs 26,596 crore, from Rs 12,375 in the year-ago period. As per industry analyst report the banks are responsible for the current state of affairs.

“The eagerness to grow business at a fast pace is now backfiring on them. The profitability of the credit card business depends on the right ticket size and the average spends. There is a transaction cost involved with the whole retail experience. Monthly statements, collection costs, and other costs are high in case of credit cards. Initially, the banks strategy was to increase volumes, rather than focus on ticket size. Thus, individuals of small ticket size were issued credit cards, and average spends resulting were smaller than expected,” the analyst said.

The analysts are of a view that in the future there will be increase in the problems of credit card companies with the increase in customer defaults in future. “Rising inflation, volatile markets, and skyrocketing crude oil prices have only grown concerns of increased credit card defaults that could dampen the industry earnings,” the analyst pointed out.

Shameek Bhargava, director & head of cards — Asia-Pacific, Deutsche Bank, told Sunday ET that it is not surprising to see increase in defaults and they had predicted it. “We saw it coming. The industry was bound to witness higher delinquencies in credit cards, as some banks were putting tremendous pressure on their sales executives by setting atrocious sales targets. We, however, are not affected majorly and our risk costs are far better than other banks, as we have always focused on the segment where the risk-adjustment deal makes sense,” he said. Currently, the German bank is not having a branch operating in tier-II and tier-III cities in India.

Due to overall economic downfall the businesses are also going through downfall therefore, Bhargava supports the move by banks of levying charges on cash payments at bank branches for credit card dues.

“We are following an industry trend. We have provided customers with different types of payment options, like drop boxes, which we would like them to use.” According to Sachin Khandelwal — head of cards group, ICICI Bank, banks have updated their technology and are providing their customers with an e-platform to improve their cost-benefit ratio. “There is a very small percentage of card holders who pay in cash. We want to encourage transactions via electronic systems and the auto debit facility, which is not only paper-less but also less time-consuming,” he said.

Recently bank has introduced a charge of Rs 100 for paying credit card bills in cash with effect from June 1, 2008. According to HDFC bank official levying a charge on paying credit card bills in cash at a bank branch, is a step in the right direction for the industry. “This will encourage customers to use the online platform, which is the future and have been put in place for their convenience. “ the official said.

Banks to increase interest rates on credit cards

Before swiping your credit card be careful as the interest rates are likely to increase. Similarly to home loans or auto loans the banks are likely to hike interest rates on credit cards.

Although some banks have already taken decision on the increase in interest rates, other banks are in the process will be following soon. The present macro economic scenario is responsible for the hike.

However default rates on credit cards is also in rise (rumored to be between 10 and 15 per cent).

Recently the RBI Deputy Governor, V. Leeladhar, had expressed his concern about the fast rising default rates in credit cards in india and reprimand card issuers to be more careful before issuing the card.

However, the immediate cause for raising rates on cards is actually the higher cost of funds.

Mr Parag Rao, Head (Product, Portfolio & Service Delivery, Credit Cards), HDFC Bank, told in a telephonic talk from Mumbai told Business Line, “Till now we are charging the lowest interest in the industry. But due to over all increase in the cost of funds, we are in the process of increasing the interest on our cards effective from September 1,”

Currently, HDFC Bank’s is charging between 2.75 per cent to 2.95 per cent per month interest rate on cards.

He added, “This will go up to 3.05 per cent to 3.25 per cent. As the industry rates are between 3.1 per cent and 3.4 per cent, our revised rates will be at the lower-end”.

As per sources, other big banks including ICICI are also likely to hike rates. ``The exercise is on and hike in interest on credit cards is likely soon,” said a source in ICICI Bank who did not want to be identified.

Earlier, ICICI Bank in June had increased interest rate from 3.15 per cent per month to 3.40 per cent per month.

When enquired from HSBC Bank about any possibility of hike, HSBC Bank declined to comment on the issue. Currently it is charging 3.1 per cent to 3.2 per cent per month on its cards.

Besides adding up burden on a card holder the high interest rates will also be impacting the growth of credit cards.

“The growth in the absolute number of credit cards issued may see a dip,” said a HSBC official. ``We do see a marginal impact on the credit cards growth,” Mr Rao observed.

LIC not to partner with GE Money in proposed credit card venture

LIC was to get into joint venture with GE Money in the credit card business. According to industry officials this decision had annoyed State Bank of India (SBI). As SBI was not comfortable with the idea of GE Money partnering with LIC since it feared a conflict of interest.

In the proposed plastic money venture, GE Money was to have 30 per cent stake and LIC 40 per cent. Corporation Bank, LIC Housing Finance and LIC Mutual Fund were supposed to have 5 per cent each and the remaining 15 per cent was scheduled for a private equity player.

But now according to an LIC official, Life Insurance Corporation (LIC) will not be partnering with GE Money for its proposed venture into credit card business due to huge loss reported by SBI Cards & Payment Services Private Ltd, in which the US firm has a 40 per cent stake.

For the first time, for 2007-08 (April- March) SBI cards have shown a net loss of Rs 150 crore in its decade-long existence.

According to official, “The experience of SBI Cards with GE Money was not encouraging. We also had experienced problems in the past with foreign players. We may go alone for the credit card venture”.

It will take sometime for LIC to decide whether to go solo though a grasp of institutions are already line up to partner the insurance behemoth.

The official without giving out further details said, “There are already four to five institutions that have shown interest in partnering us”.

Official added in case LIC decided to go solo, then the insurance firm will have to take the proposed stake of GE Money, thus taking up its holding in the venture to 70 per cent.

On the other hand LIC clarified that it does not have any problem with GE Money partnering it as well as SBI for the credit cards business.

“We do not have a problem with GE Money’s presence,” Hemant Bhargava, chief executive officer-designate of the LIC’s card venture had told on April 10. Banking industry officials informed that after SBI announced an increase in bad assets from its credit card business in May, LIC was forced to start to rethink the deal.

As per earlier plans, LIC’s card venture was scheduled to start operations by the end of the current year, which seems to be uncertain.

After reporting of loss in SBI Cards, Diwakar Gupta was appointed, who was the chief general manager of State Bank of Patiala, as the chief executive officer of SBI Cards. Earlier, the post was held by a GE Money official.

How credit card can burn your pocket

Some people think having a credit card means spending freely with out any control. They do not bother to check their budget. But beware blindly using your credit card can leave you badly burned.

Most of us think credit cards are perfect solution for practically living paycheck to paycheck. We are available with funds whenever we want but there is a downside to having the ability to buy whatever you want, whenever you want.

If you are unable to pay your credit card bill, little fees for things like late payments and going over your credit limit and on top the interest will lead your balance to balloon size. You will be carrying load of debt the rest of your life if not able to clear you debt as early as possible.

Credit card interest is variable and can change unlike the fixed interest associated with savings accounts. Mostly credit card interest rates are higher at any time. On some cards if you miss a payment you might be charged high APR. On some cards bank give low APR as introductory offer but when this period is over the interest will probably be double. If your balance goes above your credit limit then also credit cards give problem.

It ‘s not that having a credit card only leads to problems it have positive points also. It can proof to be a useful tool in several situations like booking travel, paying for gas at the pump and shopping online. You also get additional benefits on credit cards like reward points and purchase protection plans.

If you want to build credit score especially when you are taking credit card for the first time then credit cards can help you in building a credit score. This helps when you want to borrow larger amounts of money to buy a car or home. This "score" is determined by one of three companies -- Equifax, Trans Union or Experian -- and basically tells a creditor how likely you are to pay back a loan on time. Use your credit card responsibly this will prove you’re worthy to creditors and will help you in getting loan easily.

Many people have ruined their lives by not paying their credit bills on time and have trapped into credit card debt. Not paying bills means you can no longer make the minimum payment therefore you’ll have to declare bankruptcy. Remember one thing bankruptcy show on your records for 7 to 10 years and you’ll find you are very limited in what you can do simple things like renting an apartment or insuring a car will become more difficult.

Make credit card your great companion from which you can get many benefits, but be smart to stay on top of your payments. Don’t let credit card become problem for your for rest of your life.

Delhi crime branch unearth credit card fraud targeting US users

The crime branch of Delhi Police unearths a major international credit card racket. Police arrested two former employees of a multinational bank for being allegedly involved in a major international credit card racket. Police has seized a machine used to commit the fraud from the accused.

The accused, identified as Manoj Gupta (24) and Saurabh Dwivedi (25), had an interesting technique of carrying out a fraud. The duo had contact at Kuala Lumpur in Malaysia, Mohammad Hassan, used to befriend American tourists and make them swipe their credit cards in a machine which could read and store data from the magnetic strip. Then the information was passed on to the accused via email. On the other hand the accused used to secure credit cards in India using fake documents like PAN cards, etc. Then they used to replace the information of the Indian card with that of a genuine American credit card said the police.

The accused were able to get more people involved in the chain, particularly lower-rung employees who used to operate swipe machines at petrol pumps and shopping centers. These employees "agents" would use the credit cards, keep 5% of the amount, and hand over the rest of the money to the duo. The Malaysian contact got 40% of the share via Western Union money transfer. And the unlucky credit card owner in the US got an inflated bill.

As Anil Shukla, DCP, crime and railways, said: "The genuine credit card holder, back in US, came to know of the crime only in the next billing cycle. He would contest the claim and ultimately the loss would be borne either by the American bank or insurance agency. Since the fraud occurred in India, no one pursued the matter any further."

"They were clever enough to use Indian names on the cards to avoid suspicion. They got away as few shopkeepers bothered to check the credit card numbers," added the DCP.

As per police reports the gang started operations in around April and collected over Rs 10 lakh, said the police. Police from the accused has seized five forged PAN cards, 18 local credit cards loaded with data of American cards, a card reader machine and Rs 10,000. A machine used to rewrite data, which it seems that the duo had purchased online, has also been recovered.

According to police sources, Dwivedi and Gupta were working in a multinational bank when they came in contact with one Anand Mishra, a resident of Mumbai, who got them introduced to Hassan. Sometime back Mishra was arrested in a similar case. Sources stated from his possession also a machine has been recovered.


Gupta was a XII class pass out, Dwivedi was a graduate. During interrogation the duo told the cops that they possessed data of around 30,000 American cards. So far, cops have recovered 12,028 data entries from their computer. Cops said more arrests are likely in the case.

"Many petrol pumps and shops have actively cooperated with them. The people involved would be arrested. We are also in touch with Mumbai police to bring Mishra here on a transit remand. Efforts are on to trace Hassan in Malaysia," said the DCP.

International credit card racket busted with the arrest of eight persons

Hyderabad police busted a credit card fraud having international consequence and involving secret leakage of clients’ confidential data by arresting eight people in Yakutpura on Thursday. This incidence is likely to adversely impact on the call centers’ operations in Hyderabad, has got the credit of being a BPO hub in India.

Acting on a tip-off, Central Zone Task Force personnel apprehended Mohammed Mujtaba Ali, 23, of Santosh Nagar, Mohammed Imran, 19, of Baba Nagar, Mohammed Abdul Aleem, 19, of Yousafain Colony, Sheikh Azeez Ahmed, 21, of Old Malakpet, Mohammed Moulana, 19, of Wahed Nagar, Syed Mohsin, 22, of Malakpet, Mohammed Abrar Hussain, 27, of Moinbagh and Mohammed Mahboob, 22, of Chandrayangutta. Mohammed Mujtaba Ali runs Fast and Fast Internet Cafe in Yakutpura.

The accused using the American Express international credit card details of foreigners which were supplied by the call centre employees, used to pay power, water and property tax bills. The Commissioner’s Task Force DCP V.B. Kamalasan Reddy told in a press conference up to now, the gang had paid over 350 bills online involving a sum of Rs. 10 lakh.

Members of the gang would even approach individuals, who received huge water and other bills, assured them to clear the full bills even if half the bill amount was given.

After collecting the bill copies from the individuals, the gang members would pay the amount online using the credit card number and code of the foreigner they had acquired through their agents working in call centers. DCP told Mohd. Moulana, 19, working in Nirnay Technologies call centre at Chaitanyapuri, was one such agent of the gang. In a media conference held by police Moulana told, “I am not connected to the gang that fraudulently made the online payments. But I passed on one customer’s credit card data to one of them”.

The gang used to go to the individual with the payment receipt, collect half the bill amount and share it among themselves. This fraud has been going on for the past six months. Mohd. Abdul Aleem is one of the person among the eight arrested persons. Before also he was arrested on similar charge three months ago.

Police informed that there are chances that the fraud might be carried on a much larger scale all over the city. “There could be many persons like Moulana leaking vital data. We’re trying to track them,” the DCP explained. He said the persons who paid water, power and property tax bills through this gang too were liable for punishment and probe was on to identify them. No case has been registered because the fraud was committed using credit card information of foreigners.

Police sources told that they are writing to the American Express company officials about the fraud busted here. They had warned people to be alert and not to get lured by such gangs offering to clear civic amenity bills with less payment.

Courier staff held for stealing credit cards

The South district police arrested two courier company employees for allegedly stealing credit cards being sent to users through courier. Police said they have been able to bust a gang of credit card thieves; the gang's mastermind was a school dropout, Birendra Kumar (26), who worked in Elbee Express courier firm. The accused used to steal the credit cards being sent to users through courier and made hefty purchases through them. The gang even bought a Maruti Alto car using a stolen card.

The technique used by gang's exposes the carelessness in security norms followed by banks in dispatching credit cards to users, many of whom don't even ask for it.

Police told Kumar used to collect bundles of envelopes containing credit cards from ICICI Bank in Noida for delivery to the courier office. The gang would take out credit cards from certain envelopes, like those addressed to business executives. These cards would be then replaced with thick paper cards, police said. The gang used to create fake identity proofs matching the names in the credit card and did the high-value purchasing with the cards.

Four persons arrested for buying credit card numbers

The MIDC police arrested four persons in Mumbai for allegedly shopping online using credit cards numbers fraudulently. According to police report Ayaz Pansari, 26, expected to be key player of the fraud, was arrested on May 24 and he led the police to the other three accused — his wife Sania, 19, and their two accomplices Mohammed Taki, 36, and Ramesh Chaudhari, 40. They were arrested from Bhayandar on June 3.

During interrogation, the couple told the police that they are having a list of credit card numbers which they got through an “unknown person” by paying him Rs500 for each number.

They told the unknown person claimed to be a bank employee.

Senior inspector Pradeep Sonawne of MIDC police station said, Pansari was a former employee of a Direct Sales Agent (DSA) that gets contract from banks for getting customers for credit cards. “Two years ago Pansari left the job, but he had the list of credit card numbers and the pin numbers of the customers”.

The accused purchased a mobile phone worth Rs24, 000 from a shopping mall online using a credit card number that belonged to a 47-year-old businessman; here his luck went against him. On March 19 Chandra Prakash Awasthi, registered a complaint in which he said he was shocked when he received the credit card statement in March which showed that he had purchased a mobile phone.

Sonawne informed so far, four cases of fraudulent shopping have been noticed. “The couple used to stay on lease and vacated the place after every two-three months,” said a police officer.

The accused have been booked under Sections 34 (common intention), 411 (dishonestly receiving stolen property), 420 (cheating) of the IPC. They have been remanded to police custody till June 7.

Spending with credit card is a concept of mental accounting

When doing shopping have you ever thought why you find easier to shop with credit or a debit card than actual cash? Why is it much easier to spend with plastic money?

You will get answer for your question in a concept called mental accounting, a term coined by Richard Thaller, a pioneer of behavioral economics.

According to Thaller the term can be defined as “the inclination to categorize and treat money differently, depending on where it comes from, where it is kept and how it is spent.”

As Gary Belsky and Thomas Gilovich mentioned in their book, Why Smart People Make Big Money Mistakes and How to Correct Them, “In fact, credit cards and other types of revolving loans are almost by definition mental accounts, and dangerous ones at that. Credit card dollars are cheapened because there is seemingly no loss at the moment during the purchase, at least on a visceral level. Think of it this way: If you have $100 cash in your pocket and you pay $50 for a toaster, you experience the purchase as cutting your pocket money in half. If you charge that toaster though, you don’t experience the same loss of buying power that your wallet of $50 brings.”

In other words spending cash to buy things give more pain to individuals. “In fact, the money we charge on plastic is devalued because it seems as if we’re not actually spending anything when we use cards. Sort of like Monopoly money,” Belsky and Gilovich add.

But one thing that every card holder does not keep in mind is that money spent through a credit card is more expensive in case of failure to repay the amount during the credit period because high interest is charged for on the payments.

Moreover, individuals paying with credit card cannot see the money they are spending so they end up spending more. As Belky and Gilovich point out, “But you may be surprised to learn that by using credit cards, you not only increase your chances of spending to begin with, you also increase the likelihood that you will pay more when you spend than you would if you were paying cash.”

Therefore next time going for shopping and do not have enough money leave the credit card at home pay shopping bills in cash.

Chennai police busted fake credit card racket

Chennai police busted another fake credit card racket by arresting four people and search is on for 11 more people in connection with the case. Earlier police had arrested seven persons for using fake credit cards and cheating banks.

Police told that gang had cheated banks to the tune of Rs 65 lakh. The gang members obtained credit cards from leading private banks by presenting fake documents.

Police recovered three cars, a lap top, two LCD Tvs and 17 credit cards from the accused.

Central Crime Branch Deputy Commissioner D Vijaya Kumari said there are many loopholes in the existed credit card processing of leading private banks, which had outsourced 75 per cent of the process to private parties.

"We had asked the banks to ensure that they provide cards only to genuine customers after perusing applicant's profile in detail," she added.

In the earlier case, in which seven persons were arrested from them police had seized over 70 credit cards, which the gang had availed from various leading private banks after presenting fake documents. They had duped the banks to the tune of Rs 65 lakh.

American Express to increase growth in corporate card

In India corporate card market is expanding rapidly by 25% a year. American Express Corporate card, has a base of almost 5,500 Companies in India, and is growing at around 50% for the last couple of years.

American Express, one of the world’s leading corporate card issuers, has planned to make its mark both in big corporate and small & medium enterprise (SME) segments. .

Currently, big corporates or the large market (LM) account is driving bulk of Amex’s revenues in India.

“LM has been growing by almost 40% and seems to be the biggest revenue driver for next few years,” said Prashant Agarwal, head of consulting at American Express for Japan and the Asia Pacific region.

Agarwal said, “We expect the industry to grow by at least 25% over the next few years”.

American Express conducted a survey according to which, about 83% of the LM segment has some form of corporate cards.

Buy fund units using credit cards

Share market is quite, fund houses are busy in making new arrangements, that is searching for alternate payment gateways that will help individuals in making mutual fund investments, which could not have been possible if there has been movement in the share market.

Some of the bigger players among the fund houses are working out the plan to roll out the services whereby credit cards and mobile payments can be used in favor of mutual fund investments.

M N Srinivasu director of BillDesk that facilitates the payments channel for mutual funds among many other industries points out, “At least two players are almost ready to offer payments via credit cards.”

The cost of transaction is the main hurdle for mutual funds for not been able to accept credit card payments.

If transaction is allowed through credit card then mutual funds would have required paying 2% to the credit card company for each transaction, as against around 2.25% to the broker.

It is being considered that fund houses have been asking for reduced costs as the credit card industry will be benefited in terms of number and value of transactions.

It seems the cost may be the factor for life insurance companies for not promoting the credit card payment channel. Currently only few of life insurance companies are using this channel.

Other than credit cards, payments using mobile phones are also being taken into consideration for an entry into the fast-growing mutual fund industry. Talks are being held between mobile payments provider mChek and several fund houses, and according to Sanjay Swamy, chief executive officer of mChek atleast some of them are set to announce the launch of this facility within few weeks.

Meanwhile insurance companies such as ICICI Prudential Life Insurance and Reliance Life Insurance have already allowed mobile payments for their customers, while soon a foreign insurance giant is expected to roll out the facility.

It is just one-time payments in general insurance, made via credit cards and has gone down considerably.

In case of mutual fund and insurance sectors, the credit card or mobile payments may or may not necessarily be first-time payments. But still it is to be seen how fund houses manage with the stringent KYC requirements that mutual fund regulators ask for.

You have the right to get credit report

You decide to take a loan and apply for it with your bank. Then you get a call from your bank that your loan application has been rejected. This can happen in case of credit card also. On asking bank gives the reason that you have a ‘bad credit history’.

In case you have, you have a right to ask the bank for the data based on which it took that decision.

According to law, if a bank refuses loan or credit card application on the basis of data provided by a credit bureau, it is supposed to give you a copy of those records.

On the other hand, before you are given the report, you might have to prove that you are the person whose credit report is required. Therefore you must carry an identity proof and address proof with you.

Remember, except you nobody else, not even your kith or kin, would be handed over your report. To obtain the credit report you have to apply for loan or a credit card otherwise you will not get it.

The process of credit report

At present the Credit Information Bureau (India) Pvt Ltd (Cibil) maintains records of your borrowing history with all the banks you have transacted with. These include details such as your permanent account number, the addresses you have notified banks about, number of credit cards you hold currently or have held in the past, loans you have taken, the period within which you have repaid or whether you have not repaid and for what period you have not repaid.

The Cibil provides report to all its 147 members, who in turn keep the database updated. As and when a person applies for a loan or credit card, the member banks would check with the Cibil database.

The system also keeps check of the details such as the last time any bank checked for your credit records. This indicates the last time you applied for a loan with any bank, as banks are not supposed to check the Cibil database unless they receive a loan or credit card application.

Banks are not allowed to check the records for marketing purposes. According to banking source each time they check the database, they are charged for it.

In case of individual whether they are being charged for the report, DNA Money carried out a random survey and found that some banks charge between Rs 50 and Rs 300 for furnishing credit reports.

Cibil is currently working on a system whereby you can get your credit report against a payment of Rs 100.

If case you find any inconsistency in the data maintained by Cibil on you, then you should inform the bank and take up your case with Cibil. However, note that you would require the credit report as a proof to even take up the case. So keep your copy safe.

Increase in number of Indians deferring credit card payments

In the recent time the number of defaulters of credit card payments has increased. More and more Indians prefer to default of their credit card payments. As per the latest records of Reserve Bank of India over one year, credit card out standings have gone up by more than 50% to Rs 19,344 crore as on February 15, 2008. Moreover the growth of credit card outstanding is taking place at a time when there has been a control on overall credit growth. The growth in personal segment has been of mere 9% from February 16, 2007, to February 15, 2008.

In an interview with Sunday ET Reliance Money CEO Sudip Bandyopadhyay told that banks are already facing slow growth in personal loan segment in the backdrop of the imposition of stringent rules and slowing down of economy. He said, “This is why banks such as ICICI Bank are actively encouraging consumers to buy products through credit card route which is more cost-effective in comparison to the personal loan segment.”

In financial year ’06 the outstanding of credit card was 41%, which moved up to 47%, in financial year ’07. According to report the credit card outstanding as on March 2005 was just Rs 6,432 crore, it was one-third of total credit card outstanding today. In spite of low percentage of users of plastic money by Indians as compared to many other nationals there has been steep rise in the credit card outstanding in the country.

As per the research done by the Visa in Asia, Indians make just 1% of their total purchases through credit cards against 20% for the Koreans while global average hovers around 9%.

However Standard and poor’s Asia-Pacific chief economist Subir Gokarn, has a view that there is no correlation between personal loan and credit card outstanding. “There is such a small percentage of population that owns a credit card unlike the West where outstanding figures are reflective of systematic risk in the economy. The increase in outstanding is more of a reflection in the growth of credit card companies’ catchment’s area. After all, India is adding a young population to its labor force, which doesn’t believe in saving. For today’s youth, spending comes naturally,” he said.

According to internal estimates of Barclay card the Indian credit card market size at 23 million cards, and it has the potential to grow to at least 55 million cards by 2010-11.

Banks prefer credit card payment mode than post-dated cheque for consumer durables

Now banks are promoting payment for consumer durables through credit cards rather than giving loans to buy consumer durables. So if you are planning of taking loan to buy an expensive laptop for your personal use or wide screen 34 inch LCD TV for your family then it is not possible. You have to have credit card for buying these things.

ICICI Bank, India's largest retail bank, is in a procedure of closing down its retail service finance or consumer loans division. Earlier GE-Money and CitiFinancial, two of the most aggressive firms in the segment, have already stopped consumer durable financing.

Bankers say that banks which are still having consumer loan divisions would rather not give out such loans.

The post-dated cheque is being taken over by credit card payment mode. "Cost of operations in the consumer durable loan business is very high because of the small tenure and small ticket size," says an official from Kotak Mahindra Bank.

Then what should consumers do who are looking for credit to buy a consumer durable? They have to search for a merchant EMI (equated monthly installment) scheme between a bank and a product maker/seller. Under this scheme, the price of the product is split in 0% EMIs across 3 to 24 months.

"The price of the product is added to the overall credit card limit of the customer. These loans are normally through a tie-up with the merchant or a seller. The EMIs are for a short period - normally six months to one year - and it's a win-win for both banks and customers as the latter get reward points for payment of EMIs," said an official from Axis Bank.

Bankers say it is easier to keep track of a borrower through the credit card, especially when there is rise in defaults on consumer durable loans.

In case there is no merchant EMI scheme for the product and no consumer durable loan is available either, then the other option left with consumers is to take a personal loan on credit card. "Using credit card to pay a loan means a bank saves on processing cheques and it is also easier to track the loan repayment," says the official from Kotak Mahindra Bank.

Similar to most of credit cards, these personal loans also have a free credit period of around 45-50 days. After that the repayment EMIs start. The rate of interest charged on the loan is built into the EMI.

One thing to be taken care is that late payment on these loans invites rates of interests similar to those on credit cards. And the interest can vary anywhere from 40-45%. The interest charged will be double i.e. interest charged will be over and above the interest charged for the personal loan.

In comparison to this new scheme most consumer durable loans used to charge an interest of around 20%. Also prepaying these loans involves paying a prepayment charge of 2-3% on the principal outstanding amount.

Through smart cards banks reach to rural, urban poor

More and more banks have reached to the doorsteps of the urban and rural poor through smart cards and biometric cards. Smart card provider, FINO (Financial Information Networks and Operations) has just brought in one million households under its fold, in a joint arrangement with a number of banks including Union Bank of India, ICICI Bank and PNB.

The company has issued 8.5 lakh cards bringing million of house holds under its umbrella “The card issuances happen with a lag, but we have got a million customers already and issuances will follow,” FINO CEO Manish Khera said.

From few years the central bank has been emphasizing for reaching out the banking facilities to the poor people in rural areas. Working on these lines the banks are trying to draw in more people into the formal banking network by reaching out to the poor people in rural areas as well as hawkers in urban areas.

The Union Bank of India chairman and managing director MV Nair, stated that his bank has brought in two lakh people and the number is split between rural and urban poor. “Union Bank’s target for 2008-09 is to include half-a-million customers in rural as well as urban areas. We will issue cards to them as well, and encourage them to be a part of the formal financial system,” he said.

Smart cards, or biometric cards are similar to debit cards, but they use fingerprinting for identification instead of personal identification codes. According to Mr Khera this technology is actually safer than the current one used for debit and ATM cards.

He gave the suggestion that with the introduction of the fingerprinting and client-details in their database can contribute to the National ID program, as they are unique identification devices. He further added that the client’s ‘e-passbook’ is loaded on the card itself and contains all the financial details of the holder. The scheme got a good response since they are actually reaching out to the customers. “Banks normally adopt a passive approach to the poorer segments, further their procedural requirements can not be satisfied by most of the hawkers and migrants,” said Mr Khera. Banks, which have joined with FINO, have relaxed some of their know-your-client (KYC) requirements.

PNB decide to go solo in credit card business

Delhi-based Punjab National Bank (PNB) the second largest government-owned bank had announced in September 2007 that it has entered into a partnership with AIG and Infotech Global for credit card business. The bank has applied with the Reserve Bank of India for the approval of its joint venture. Following the delay from the RBI in granting them approval for the joint venture with American International Group (AIG) and Venture Infotech Global the bank has decided to go on its own with its credit card business.

When PNB’s chairman and managing director K C Chakrabarthy was contacted for his comments he declined.

As per the sources of the bank it has waited for about six months for the approval from the RBI and subsequently decided to go ahead with credit card business departmentally, rather than floating a subsidiary.

The bank has plans to launch the credit card business by October this year. Currently, the bank is having a co-branded card with HSBC, wherein PNB would only source clients, the risk and the rewards are reflected in HSBC’s books. Once the bank launches it’s own card, it will discontinue the tie-up with the foreign bank.

While RBI has not given any clear reason for delay, but according to the sources RBI might not be very comfortable with PNB’s tie-up with foreign partners for the credit card business as they do not have full regulatory control over the JV which would fall in the NBFC category.

“We have decided to start it within the bank since it does not require regulatory approval. Subsequently, as and when RBI approves the JV, we will hive off the credit card department as a separate subsidiary,” said a senior bank official. Among other Indian banks, State Bank of India and Bank of Baroda has separate subsidiaries for credit card business, while Bank of India is considering it. “We will approach the RBI when we have identified a partner for the alliance,” said Bank of India officials.

In India credit card user percentage increase by 50% in FY08

According to the reports from the banks and credit card issuers in India such as Citibank, American Express and Standard Chartered, have recorded a sharp jump of 50% in card usage in FY08.

Although in India on an average consumers spend Rs 4,000 per month per card, which is considerably less in comparison to other Asian nations like China, Japan and Thailand. In India the disposable income has gone up with this the use of plastic money is gaining prominence and has started picking up the pace after holding on to steady growth for years.

Three to four years ago, in India consumers used to spend around Rs 1,500 a month on their cards. Credit Card Management Consultancy (CCMC) director Vijay Mehta, said, “With disposable income going up in India and organized retail gaining prominence, consumers are increasingly getting used to credit cards”.

It is not only the organized retail sector responsible for the increase in the usage of plastic money but the co-branded cards and the benefits they offer are also responsible for more usage of credit card. Consumers in India are slowly shifting to co-branded cards, because of the benefits offered by the cards in the form of reward schemes and discounts given by both the credit card companies and tie-up firms.

For instance, American Express has tie-ups with Kingfisher Airlines and Airtel, Citibank has teamed up with MTV and Jet Airways and market leader ICICI has co-branded cards with HPCL and India times.

American Express vice-president-marketing Amit Dutta said, “Co-branded cards are doing extremely well and are instrumental in fuelling proportionate growth in the industry. We have witnessed a significant growth of 50% in the credit card section.”

With change in lifestyle, there has been change in the outlook of the consumers. Slowly the consumers are shifting to using credit cards for purchasing products and services against the traditional forms of payment such as cash or cheque. Increase in the usage of internet has also helped credit card industry.

“Since a host of services like airline or railways tickets, hotel bookings and movie shows can now be booked through the Internet by using credit cards, average spends per card have gone up,” said a Citibank official.

According to CCMC, figures at present there are about 25 million credit card holders in the country and it is expected the number will increase significantly in 2008-09. Around 40% of the cards are still inactive as a large number of consumers have multiple cards, but most of them use only one or two actively.

ICICI Bank and American Express launched new line of credit card

ICICI Bank and American Express together signed an agreement in 2003 under which the ICICI Bank can issue American Express branded cards that can be used on American Express’ global merchant network.

ICICI Bank India’s second largest bank and American Express bank one of the world's leading financial services companies, in a joint venture launched two credit cards the “ICICI Bank Ascent American Express® Card” and the “ICICI Bank Business Ascent American Express® Card” .

The ICICI Bank Ascent American Express® Card offers customers a powerful value proposition of accelerated rewards and exclusive privileges for the sophisticated, affluent Indian consumer.

The second card ICICI Bank Business Ascent American Express® Card has been designed exclusively for entrepreneurs who will benefit from the Business Advantage Program featuring attractive savings on business related expenses.

Addressing at the launch, Mr. Sachin Khandelwal, Head Cards Group, ICICI Bank said, “Over time a card reflects upon the purchasing power and the changing lifestyle of a customer. Currently ICICI Bank has over 9.5 million customers and the increasing usage of credit cards in India makes it vital for us to meet the diverse needs of our customers.

The tie up with American Express will provide us with the platform to extend our offerings and the enhanced rewards program will assure our customers greater value every time they use the card.”

Mr. Kula Kulendran, Senior Vice President, Head of Global Network Services for Japan, Asia-Pacific and Australia region, American Express said, “We are delighted to have partnered with ICICI Bank to develop a very relevant and differentiated value proposition and I am confident that customers will be thrilled by this suite of products. Around the world, American Express partners with banks that share our commitment to superior customer service and providing quality products to customers. With ICICI Bank we have found the right partner to meet the needs of the Indian consumer.”

A comprehensive rewards program is attached to the ICICI Bank Ascent American Express Card that offers up to 6% of the value of transactions on the card. ICICI Bank and American Express have aligned with Taj Hotels Resorts and Palaces, Yatra.com and Provogue to create a world class rewards program and attractive year long privileges to card members. The card also offers various services like a personal concierge service, comprehensive travel insurance and the American Express Selects SM program providing exclusive discounts and privileges to card members in India and when traveling overseas.