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.