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.
Thursday, August 28, 2008
Monday, August 25, 2008
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.
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.
Tuesday, August 19, 2008
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.
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.
Monday, August 11, 2008
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.
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.
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