In the terms and conditions of credit cards often, you must have read “due date” for paying credit card bills. First understand what “due date” means. As per a senior banking ombudsman official, credit card customers “unofficially’’ get “a grace period’’ of about three days after their due date in case they decide to make payment through cheque, to allow the amount to get credited into their account, which means, bank will not levy any late-payment charges.
On the other hand the heads of leading card-issuing banks have different view, they say in terms and conditions, given on bill statements and websites clearly states that cheque payment must be made three to five days (in case of outstation cheques) before the due date so that it comfortably reaches their account by the deadline.
What happens when a string of bank holidays and weekends falls between cheque deposit and its clearance? Suppose a cheque does not get cleared for reasons where consumer cannot do anything, then he/she still has to pay penalty charges.
According to Mumbai banker the due date-related disputes are common and from long time the consumers have been demanding for clarity on the issue. K Unnikrishnan, deputy chief executive, Indian Banks’ Association, while supporting said uniform norms on cheque deposit with reference to due date are required.
Sanjeev Talwar of Delhi-headquartered National Consumer Helpline stated this issue is quite serious because such a “default’’ will show up in a consumer’s credit history at Cibil (Credit Information Bureau India), from where banks gather information before deciding on sanctioning loan.
However banker added, in India, customers have to first pay a charge and then dispute will be resolved. While in developing countries, a card holder has the option not to pay a part of the billed amount in case he or she feels there is a dispute.
Thus any clear guidelines are formulated regarding this, customers should pay their payments ahead of the stated due date. Also, if they pay closer to the payment deadline, they should avoid depositing their cheques in drop boxes.
As per the Reserve Bank of India rules the banks must accept all cheques at counters and give an acknowledgment receipt to the customer. In case of any dispute this will serve as a proof of deposit.
On the other hand more and more banks are introducing “cheque deposit machines, which work like a screener and give you a receipt, which is a replica of your cheque with all the details,’’ informed a bank executive. Moreover to avoid long queues at counters, they provide the relevant proof. The consumers must remember the ruling in case of disputes rely on documentary evidence.
Friday, November 6, 2009
Tuesday, November 3, 2009
Banks slowed down on selling credit cards, learnt lesson from the credit crunch
Banks have slowed down on selling credit cards. The banks have learnt lessons from the credit crunch therefore banks are not ready to vow for unsecured credit. Moreover at least one bank is thinking of stop issuing credit cards completely. Last year when several banks and financial firms saw rise in delinquencies, they had reduced their exposure to the personal loan segment.
According to some bankers the present uncertainty grew due to "aggressive" issuance of cards by certain banks. Shameek Bhargava, managing director, cards (Asia Pacific), Deutsche Bank said, "Often this issuance was not backed by conventional forms of credit appraisals". "And it was targeted at a base of prospective customers who were already holding credit cards of one bank or the other creating over-leveraging of customers."
Often, on new card banks offered free offers such as waiving off annual charges, and issuing an additional card (add-on) for free. Due to this banks were able to attract more customers but most of the customers used a primary card, while the other cards remained unused, in their wallets, this increased the operating cost of the respective banks, informed an industry person.
In India private banks were ahead in the credit card movement, which prompted the public sector banks to join the bandwagon.
In view of this many nationalized banks and smaller private banks issued cards to their account holders while private banks offered the facility to any one who was covered under their credit card issuance norms.
But now nationalized banks have slowed down in issuing the credit card. Nagammal Reddy, managing director, Tamilnad Mercantile Bank pointed out, "We have around 5,000 card holders. While we would like to double this number, we won't aggressively market our offering like private banks to meet our target". While the Indian Overseas Bank is thinking of completely withdrawing from the credit card business. A senior official from the bank said, "There has been some talk of withdrawing from this business altogether". According to senior bank official from the bank, "Till such time, we will run the business as it is and won't be aggressive in acquiring new customers". IOB is having around one lakh credit card holders who are also account holders with the bank.
However most of the banks are planning to increase their fee-based income through banassurance and third party product offerings such as mutual funds, rather than completely being dependent on interest income.
Bhargava stated, "It is likely that the (credit card) industry will witness the comeback of fees in some fashion. This will also benefit customers in controlling the amount of credit card debt they can sustain".
According to some bankers the present uncertainty grew due to "aggressive" issuance of cards by certain banks. Shameek Bhargava, managing director, cards (Asia Pacific), Deutsche Bank said, "Often this issuance was not backed by conventional forms of credit appraisals". "And it was targeted at a base of prospective customers who were already holding credit cards of one bank or the other creating over-leveraging of customers."
Often, on new card banks offered free offers such as waiving off annual charges, and issuing an additional card (add-on) for free. Due to this banks were able to attract more customers but most of the customers used a primary card, while the other cards remained unused, in their wallets, this increased the operating cost of the respective banks, informed an industry person.
In India private banks were ahead in the credit card movement, which prompted the public sector banks to join the bandwagon.
In view of this many nationalized banks and smaller private banks issued cards to their account holders while private banks offered the facility to any one who was covered under their credit card issuance norms.
But now nationalized banks have slowed down in issuing the credit card. Nagammal Reddy, managing director, Tamilnad Mercantile Bank pointed out, "We have around 5,000 card holders. While we would like to double this number, we won't aggressively market our offering like private banks to meet our target". While the Indian Overseas Bank is thinking of completely withdrawing from the credit card business. A senior official from the bank said, "There has been some talk of withdrawing from this business altogether". According to senior bank official from the bank, "Till such time, we will run the business as it is and won't be aggressive in acquiring new customers". IOB is having around one lakh credit card holders who are also account holders with the bank.
However most of the banks are planning to increase their fee-based income through banassurance and third party product offerings such as mutual funds, rather than completely being dependent on interest income.
Bhargava stated, "It is likely that the (credit card) industry will witness the comeback of fees in some fashion. This will also benefit customers in controlling the amount of credit card debt they can sustain".
Friday, October 30, 2009
ATM unit, cash, CCTV robbed from bank
Generally thieves withdraw money from ATM using stolen debt or credit cards from other people accounts but in this unusual robbery thieves took off a 500-kg ATM — lock, stock and barrel from Kasarwadi branch of Union Bank of India in Pune around 3 am on Tuesday. The Union Bank of India has faced a loss of nearly Rs 11 lakh plus the cost of the machine.
The robbery attempt was in a much planned manner as hardly any marks can be seen on the floor from where the machine was pulled up, nor did the alarms go off at that time. It is alleged the gang might have come in the dress of ATM maintenance hands and took away the booty in a truck.
The cost of the ATM unit is around Rs 3 lakh and that time there was about Rs 10.8 lakh cash in the machine. Capt Akashdeep Chauhan, manager (security), Union Bank of India said, “The theft could have been done after a lot of study. The ATM has an inbuilt alarm that goes off even if the machine is hit hard, leave alone the effort to break it open. Also, the machine is so heavy that even four-five people cannot easily lift it. I was surprised to see no marks on the floor of the ATM centre from where the machine was dragged out”.
Chauhan added the thieves might have taken the unit on rollers and machines and then loaded in a van or truck. Chauhan said. Police Inspector (Crime) Ravi Chaudhar stated, “It is not humanly possible to physically lift it and lug it on the road”. According to police Inspector (Crime) Ravi Chaudhar, “The branch is on the first floor and opens from 10.30 am to 5.30 pm, while the ATM is on the ground floor. The security guard, Niranjan Adgale, did not turn up for duty on the day. If he were there, he could have prevented the theft or at least provided police with some leads. We enquired with the security company, which provides guards at 36 ATMs in the city, but they have no record of attendance for their staff. Such is their callousness.”
Chaudhar, told the bank manager Chandrashekar Kulkarni in his complaint has stated that some furniture work was being done in the bank on Monday and only the sweepers and carpenters were present when he had left around 7.30 pm. He was informed about the incidence by the bank staff who contacted him on phone on Tuesday morning.
Chaudhary told as the ATM was not fixed to the floor, thus thieves were able to remove it easily. Moreover the CCTV is inbuilt in the machine, so the identity of thieves is not possible. He added, “The service provider who manages ATMs also failed to alert bank officials when connectivity of the ATM centre was lost”.
DCP Mahesh Patil said, “We are inquiring with the security agency as to why the watchman was absent. Our teams are on the trail of the gang”.
Capt Ravi Nair, manager (security) with Bank of Maharashtra said, “There are 700 ATMs in the city. The incident raises questions on our preparedness to prevent such theft. Banks outsource ATM services to third party companies that are supposed to alert the bank and security officials when connectivity of an ATM is lost. But due to power failure and road digging work, these machines get disconnected many times, so such incidents are not taken seriously.”
The robbery attempt was in a much planned manner as hardly any marks can be seen on the floor from where the machine was pulled up, nor did the alarms go off at that time. It is alleged the gang might have come in the dress of ATM maintenance hands and took away the booty in a truck.
The cost of the ATM unit is around Rs 3 lakh and that time there was about Rs 10.8 lakh cash in the machine. Capt Akashdeep Chauhan, manager (security), Union Bank of India said, “The theft could have been done after a lot of study. The ATM has an inbuilt alarm that goes off even if the machine is hit hard, leave alone the effort to break it open. Also, the machine is so heavy that even four-five people cannot easily lift it. I was surprised to see no marks on the floor of the ATM centre from where the machine was dragged out”.
Chauhan added the thieves might have taken the unit on rollers and machines and then loaded in a van or truck. Chauhan said. Police Inspector (Crime) Ravi Chaudhar stated, “It is not humanly possible to physically lift it and lug it on the road”. According to police Inspector (Crime) Ravi Chaudhar, “The branch is on the first floor and opens from 10.30 am to 5.30 pm, while the ATM is on the ground floor. The security guard, Niranjan Adgale, did not turn up for duty on the day. If he were there, he could have prevented the theft or at least provided police with some leads. We enquired with the security company, which provides guards at 36 ATMs in the city, but they have no record of attendance for their staff. Such is their callousness.”
Chaudhar, told the bank manager Chandrashekar Kulkarni in his complaint has stated that some furniture work was being done in the bank on Monday and only the sweepers and carpenters were present when he had left around 7.30 pm. He was informed about the incidence by the bank staff who contacted him on phone on Tuesday morning.
Chaudhary told as the ATM was not fixed to the floor, thus thieves were able to remove it easily. Moreover the CCTV is inbuilt in the machine, so the identity of thieves is not possible. He added, “The service provider who manages ATMs also failed to alert bank officials when connectivity of the ATM centre was lost”.
DCP Mahesh Patil said, “We are inquiring with the security agency as to why the watchman was absent. Our teams are on the trail of the gang”.
Capt Ravi Nair, manager (security) with Bank of Maharashtra said, “There are 700 ATMs in the city. The incident raises questions on our preparedness to prevent such theft. Banks outsource ATM services to third party companies that are supposed to alert the bank and security officials when connectivity of an ATM is lost. But due to power failure and road digging work, these machines get disconnected many times, so such incidents are not taken seriously.”
Thursday, October 29, 2009
Using stolen ATM card man withdraw Rs 1.35 lakh
With the help of closed-circuit television (CCTV) installed at an ATM centre in Thuraipakkam police was able to catch the ATM card thief who withdraw Rs 1.35 lakh from a stolen card.
Shastri Nagar Crime Inspector Mathiarasu told S Geetha, a local resident living on First Main Road filed a complaint about her stolen credit card. Her husband, Shankar, is an engineer and worked in a Gangotri Thermal Plant in Jharkhand. Geetha owned a Bank of Baroda ATM card, which she lost on September 30 while returning from T Nagar to Adyar. More than 10 days had passed that she realized that she had lost her card. As on Sunday bank is closed, next day when she went to the bank, she found that Rs 1.35 lakh had been withdrawn from her account. She filed a complaint of lost credit card at the Shastri Nagar police station.
A special police team headed by Mathiarasu investigating the case found that the withdrawals have been done at ATM centers of several banks in Thuraipakkam area. The team on scrutinizing the CCTV tapes obtained from ATM centers found that at one ATM center, the thief first used his own card to withdraw Rs 300 cash before using the stolen one.
The police traced his address and picked up the suspect from Kelambakkam. During the interrogation police came to know about his details that his name was Tirupathi, aged 29, son of Krishnamurthy of Jolarpet and was working at construction site in Adyar. Police arrested him and remanded to judicial custody.
Shastri Nagar Crime Inspector Mathiarasu told S Geetha, a local resident living on First Main Road filed a complaint about her stolen credit card. Her husband, Shankar, is an engineer and worked in a Gangotri Thermal Plant in Jharkhand. Geetha owned a Bank of Baroda ATM card, which she lost on September 30 while returning from T Nagar to Adyar. More than 10 days had passed that she realized that she had lost her card. As on Sunday bank is closed, next day when she went to the bank, she found that Rs 1.35 lakh had been withdrawn from her account. She filed a complaint of lost credit card at the Shastri Nagar police station.
A special police team headed by Mathiarasu investigating the case found that the withdrawals have been done at ATM centers of several banks in Thuraipakkam area. The team on scrutinizing the CCTV tapes obtained from ATM centers found that at one ATM center, the thief first used his own card to withdraw Rs 300 cash before using the stolen one.
The police traced his address and picked up the suspect from Kelambakkam. During the interrogation police came to know about his details that his name was Tirupathi, aged 29, son of Krishnamurthy of Jolarpet and was working at construction site in Adyar. Police arrested him and remanded to judicial custody.
Wednesday, October 21, 2009
Credit card companies focus on fee-based cards to earn profit
Over the past few months the banks have stopped offering free credit card. Due to economic downturn banks have decided to go slow on free cards and they are mainly focusing on fee-based cards.
Earlier credit card companies to hold large portion of market shares disbursed maximum number of cards. At that time companies did not pay much attention to the repayment ability of the customer therefore the number of defaulters increased. But now the companies are looking for higher spending on the credit cards and the repayment ability of the customer, which add up to the market growth.
As banks have got cautious of payment defaults it is the right decision to focus on fee-based cards as people are likely to spend more of what they have paid for.
According to the Reserve Bank of India report the issuing of cards decline by 17.2 per cent in July from a year ago whereas there has been drop of 11 per cent in the billed business over the same period.
Rajesh Saxena, CEO, American Express Banking Corp. India, which offers only fee-based cards pointed out, “The industry is more focused on fee-based cards as the customers spend more on them. In India, the average spending of our premium card members’ is tens of times the industry average”.
Under fee-based card series few banks have launched several premium segment cards this year. In February Citibank launched its Platinum Select card with an annual fee of Rs 4,000, while in May ICICI Bank launched ICICI Bank Singapore Airlines Visa Platinum card for which it is charging an annual fee of Rs 6,000.
Sandeep Bhalla, Business Manager, Cards, Citi India said, “As customers become more discerning in their choices, products that will carry a fee may well become an increasingly important feature of credit cards market”.
According to industry executives people who take premium cards use them all the time. On the other hand due to inactive and free cards the card industry in India has been badly affected, whereas the premium card segment is equivalent to the global standards.
“Card usage patterns of premium customers in India are very comparable to markets like Hong Kong, Singapore & US,” said Saxena.
Earlier credit card companies to hold large portion of market shares disbursed maximum number of cards. At that time companies did not pay much attention to the repayment ability of the customer therefore the number of defaulters increased. But now the companies are looking for higher spending on the credit cards and the repayment ability of the customer, which add up to the market growth.
As banks have got cautious of payment defaults it is the right decision to focus on fee-based cards as people are likely to spend more of what they have paid for.
According to the Reserve Bank of India report the issuing of cards decline by 17.2 per cent in July from a year ago whereas there has been drop of 11 per cent in the billed business over the same period.
Rajesh Saxena, CEO, American Express Banking Corp. India, which offers only fee-based cards pointed out, “The industry is more focused on fee-based cards as the customers spend more on them. In India, the average spending of our premium card members’ is tens of times the industry average”.
Under fee-based card series few banks have launched several premium segment cards this year. In February Citibank launched its Platinum Select card with an annual fee of Rs 4,000, while in May ICICI Bank launched ICICI Bank Singapore Airlines Visa Platinum card for which it is charging an annual fee of Rs 6,000.
Sandeep Bhalla, Business Manager, Cards, Citi India said, “As customers become more discerning in their choices, products that will carry a fee may well become an increasingly important feature of credit cards market”.
According to industry executives people who take premium cards use them all the time. On the other hand due to inactive and free cards the card industry in India has been badly affected, whereas the premium card segment is equivalent to the global standards.
“Card usage patterns of premium customers in India are very comparable to markets like Hong Kong, Singapore & US,” said Saxena.
Citibank launched new rewards platform for Citi-branded credit cared holders
Citibank India has launched a new rewards platform – CitiRewards, for its customers who own Citi-branded credit cards to provide them new experience.
In a statement released by the bank Citi India Business Manager (Cards), Sandeep Bhalla, said, "This new platform transforms rewards from being an add-on product of card ownership to the center of customer experience".
Through this platform the customers will get to redeem their reward points from over four-million products –from travel to electronic goods, Shoppers Stop gift vouchers and home-delivered flowers to fitness clothing and shoes.
Also the Citibank Platinum Select and Citibank Titanium Cash Rewards credit cards through Citi Rewards can also redeem their points to clear their card outstanding dues or for air miles across multiple airlines in the country.
In a statement released by the bank Citi India Business Manager (Cards), Sandeep Bhalla, said, "This new platform transforms rewards from being an add-on product of card ownership to the center of customer experience".
Through this platform the customers will get to redeem their reward points from over four-million products –from travel to electronic goods, Shoppers Stop gift vouchers and home-delivered flowers to fitness clothing and shoes.
Also the Citibank Platinum Select and Citibank Titanium Cash Rewards credit cards through Citi Rewards can also redeem their points to clear their card outstanding dues or for air miles across multiple airlines in the country.
Thursday, September 10, 2009
Axis Bank plans to increase credit & debit card base over 13 mn this fiscal
Where most of the banks have reduced issuing of credit cards due to various reasons, in spite of challenging market conditions, Axis bank a leading private sector lender is planning to increase its credit and debit card base to over 13 million (1.3 crore) by end-fiscal, this was informed by a top official.
Axis Bank's Vice-President - Retail Financial Services Anuj Khosla told press, “We expect to add 24 lakh new cardholders this year. This would take the total card-base to around 1.34 crore. There is a healthy demand for card-based banking products in the market''. Till now bank has issued 1.1 crore cards out of which, 5.5 lakh are credit cards and the rest were debit cards.
Khosla informed bank is in a process of implementing an aggressive strategy to increase its card-base with nearly two lakh debit cards and 35,000 credit cards being added every month. Khosla added last year the banking industry has faced loss due to increase in the number of Non-Performing Assets (NPA) on credit cards, therefore banks have decided to go slow on expanding their credit card-base and to focus more on increasing the debit card business.
Axis Bank's Vice-President - Retail Financial Services Anuj Khosla told press, “We expect to add 24 lakh new cardholders this year. This would take the total card-base to around 1.34 crore. There is a healthy demand for card-based banking products in the market''. Till now bank has issued 1.1 crore cards out of which, 5.5 lakh are credit cards and the rest were debit cards.
Khosla informed bank is in a process of implementing an aggressive strategy to increase its card-base with nearly two lakh debit cards and 35,000 credit cards being added every month. Khosla added last year the banking industry has faced loss due to increase in the number of Non-Performing Assets (NPA) on credit cards, therefore banks have decided to go slow on expanding their credit card-base and to focus more on increasing the debit card business.
Wednesday, September 2, 2009
PNB to issue 200,000 global credit cards by March 2010
Punjab National Bank (PNB) a public sector lender with an aim to expand its credit card base world wide as well as among high end customers. PNB has aim to issue 200,000 global credit cards by March 2010.
PNB Chief General Manager (Credit Card Venture) Ranjan Dhawan told reporters, "We are targeting to issue two lakh global credit cards to our customers by end of the current fiscal".
Soon the bank will be launching new cards- Corporate and Platinum credit cards. He told, "Corporate Cards will be meant for senior executives of companies who often travel for business purposes. In this category, there will be two cards such as Individual liability and corporate liability".
The second Platinum card will have enhanced benefits for high income group customers (income having between Rs 7 to 10 lakh per annum). He said, "This card will meet the requirements of customers like premium gold membership, lounge expenses etc".
He added, "Trials for these cards are already on and we hope to launch them within next two months".
Earlier in February this year bank has launched the credit cards in association with VISA, bank is already having a card base of 28,000. This card can be used at over 29 million merchant establishments and one million ATMs worldwide which are using VISA as a payment gateway.
As the bank has taken decision of venturing into Card Acquiring Business, Dhawan informed the bank under this program will be providing Point of Sales (PoS) terminals to merchandise establishments which are associated with it.
He further added, "We have sought Expression of Interest for launching this service and we hope to introduce the same within the next 8-9 months".
PNB Chief General Manager (Credit Card Venture) Ranjan Dhawan told reporters, "We are targeting to issue two lakh global credit cards to our customers by end of the current fiscal".
Soon the bank will be launching new cards- Corporate and Platinum credit cards. He told, "Corporate Cards will be meant for senior executives of companies who often travel for business purposes. In this category, there will be two cards such as Individual liability and corporate liability".
The second Platinum card will have enhanced benefits for high income group customers (income having between Rs 7 to 10 lakh per annum). He said, "This card will meet the requirements of customers like premium gold membership, lounge expenses etc".
He added, "Trials for these cards are already on and we hope to launch them within next two months".
Earlier in February this year bank has launched the credit cards in association with VISA, bank is already having a card base of 28,000. This card can be used at over 29 million merchant establishments and one million ATMs worldwide which are using VISA as a payment gateway.
As the bank has taken decision of venturing into Card Acquiring Business, Dhawan informed the bank under this program will be providing Point of Sales (PoS) terminals to merchandise establishments which are associated with it.
He further added, "We have sought Expression of Interest for launching this service and we hope to introduce the same within the next 8-9 months".
Thursday, August 13, 2009
Earn more reward points on credit card spends on weekends
Now when you shop with your credit card you earn more reward points in the current economic conditions. Banks and credit card companies are announcing special reward programs to increase the demand and help merchants in dealing with falling pace of credit card use at their shops. The consumers can earn up to five times reward points by shopping at select outlets, especially during the weekends.
Sanjeev Takru, manager (marketing) of TGI Friday's (India), pointed out although consumer confidence has been affected due to slump conditions but there has been increase in weekend spends. He said, “For marketers, it is an opportunity to tap this captive customer base by providing added value and benefits through smart partnerships. This drives both loyalty and repeat purchases, thereby increasing our sales”.
There has been increase in the consumer base comprising young working couples and the IT/BPO workforce, eating out, watching movies, socializing and visiting retail shops is now not restricted to special occasions and have thus become a part of daily lives.
Approximately around 50% of the total weekly spending is done on weekends. People mostly spend in retail shops and quick service restaurants. Sunil Sachdev, head of merchant services business at American Express informed last year company had launched Extraordinary Weekends program after it had noticed that in spite of curtailing optional expenses, consumers continued to spend on everyday expenses, such as dining and shopping. It also noticed that consumers everyday spending was more than the weekends in comparison to that on weekdays.
Last year American Express cards witnessed 30% increase in the transactions after the launch of the program in June. The company on weekends spending is offering 5 points for every Rs 40 spent on the card, in comparison to just one point on weekdays. The bank has tied up with Chroma, Wills Lifestyle, Select Citywalk for the year-long program.
Sachdev notified, “By studying both card members as well as merchants into our network, we get an understanding of how and where people spend. We track card members’ purchases at merchant establishments and then help develop profitable and targeted marketing programs that customers find valuable and relevant,”
On the other hand HSBC has introduced a limited period offer (valid till September 30) for its gold, platinum and premium card customers who can earn reward points 10 times faster at its merchant partners, such as Westside, makemytrip.com and bookmyshow.com. Bank is offering 10 points instead of one reward point, on spending Rs 100 during the offer period.
While SBI Cards is offering up to 15 per cent discount on Spicejet air tickets and domestic holiday packages booked through travelguru.com. The bank is also offering discounts on brands such as Pierre Cardin, Allen Solly and VLCC, valid up till December 31. ICICI Bank the largest credit card issuer is giving special offers including payment in monthly EMIs, an insurance plan for every member of the family and a pair of Reebok shoes at a discount of 50 per cent.
Sanjeev Takru, manager (marketing) of TGI Friday's (India), pointed out although consumer confidence has been affected due to slump conditions but there has been increase in weekend spends. He said, “For marketers, it is an opportunity to tap this captive customer base by providing added value and benefits through smart partnerships. This drives both loyalty and repeat purchases, thereby increasing our sales”.
There has been increase in the consumer base comprising young working couples and the IT/BPO workforce, eating out, watching movies, socializing and visiting retail shops is now not restricted to special occasions and have thus become a part of daily lives.
Approximately around 50% of the total weekly spending is done on weekends. People mostly spend in retail shops and quick service restaurants. Sunil Sachdev, head of merchant services business at American Express informed last year company had launched Extraordinary Weekends program after it had noticed that in spite of curtailing optional expenses, consumers continued to spend on everyday expenses, such as dining and shopping. It also noticed that consumers everyday spending was more than the weekends in comparison to that on weekdays.
Last year American Express cards witnessed 30% increase in the transactions after the launch of the program in June. The company on weekends spending is offering 5 points for every Rs 40 spent on the card, in comparison to just one point on weekdays. The bank has tied up with Chroma, Wills Lifestyle, Select Citywalk for the year-long program.
Sachdev notified, “By studying both card members as well as merchants into our network, we get an understanding of how and where people spend. We track card members’ purchases at merchant establishments and then help develop profitable and targeted marketing programs that customers find valuable and relevant,”
On the other hand HSBC has introduced a limited period offer (valid till September 30) for its gold, platinum and premium card customers who can earn reward points 10 times faster at its merchant partners, such as Westside, makemytrip.com and bookmyshow.com. Bank is offering 10 points instead of one reward point, on spending Rs 100 during the offer period.
While SBI Cards is offering up to 15 per cent discount on Spicejet air tickets and domestic holiday packages booked through travelguru.com. The bank is also offering discounts on brands such as Pierre Cardin, Allen Solly and VLCC, valid up till December 31. ICICI Bank the largest credit card issuer is giving special offers including payment in monthly EMIs, an insurance plan for every member of the family and a pair of Reebok shoes at a discount of 50 per cent.
New PIN system can lead to dip in online credit card transactions
From August 1 according to the Reserve Bank of India norms it is mandatory to have second identification number (PIN) to ensure safe and secure online credit card transactions According to sources there can be dip in online credit card transactions in August since only 20-30% of online credit card users have signed up for the second personal identification number (PIN). On the other hand banks are expecting there can be picking up in the number as in the past few days the banks have started sending SMS and email alerts to their customers.
An ICICI Bank spokesperson informed, “We have started sending out email and SMS alerts very recently and are receiving a very good response for registration from credit card customers as there are no exceptions to the RBI guideline.” At present around 20 million ICICI Bank registered users are using internet banking facility.
However in India out of 30 million credit card customers there are approximately 4-5 million active online credit card users.
As per industry estimates around 7-15% of a bank’s customer have signed up for net banking and of these registered customers only 30-40% use net banking frequently
Also the number of customers of new entrants such as Kotak Mahindra Bank stand to 10,000 out of 15,000 who have signed up for second identification number. The banks on their websites have made provision for the customers who want to sign up for additional password.
According to TV Seshadri, vice-president & country general manager MasterCard Worldwide, “Having an additional password was a voluntary exercise till last month. RBI stipulations now make it compulsory. It’s just a single password but if banks insist, we can even introduce features like a one-time password going forward”.
A few months back Visa and MasterCard have introduced Verified for Visa and MasterCard Secure codes so that customers get used to it. Under this customers are required to generate an additional online PIN which wouldn’t be mentioned on the plastic card.
There was boost in online use of debit/credit cards after the launch of online railway and flight bookings. The IRCTC, makemytrip and yatra.com websites are getting maximum customers. According to bankers, now most of the credit card customers have also started paying their utility bills such as mobile and electricity through net banking.
According to RSA report, in India major banks have lost funds of around Rs 36.5 crore because of fraudulent transactions and 13,000 such cases were filed in India.
KVS Manian, group head retail liabilities & branch banking, Kotak Mahindra Bank pointed out, “The two-stage security screening makes the possibility of fraud or theft of username and password of a customer nearly impossible as it involves simultaneous use of multiples gadgets like a computer and mobile phone”. The main reason for security breach is carelessness on the part of the customer.
An ICICI Bank spokesperson informed, “We have started sending out email and SMS alerts very recently and are receiving a very good response for registration from credit card customers as there are no exceptions to the RBI guideline.” At present around 20 million ICICI Bank registered users are using internet banking facility.
However in India out of 30 million credit card customers there are approximately 4-5 million active online credit card users.
As per industry estimates around 7-15% of a bank’s customer have signed up for net banking and of these registered customers only 30-40% use net banking frequently
Also the number of customers of new entrants such as Kotak Mahindra Bank stand to 10,000 out of 15,000 who have signed up for second identification number. The banks on their websites have made provision for the customers who want to sign up for additional password.
According to TV Seshadri, vice-president & country general manager MasterCard Worldwide, “Having an additional password was a voluntary exercise till last month. RBI stipulations now make it compulsory. It’s just a single password but if banks insist, we can even introduce features like a one-time password going forward”.
A few months back Visa and MasterCard have introduced Verified for Visa and MasterCard Secure codes so that customers get used to it. Under this customers are required to generate an additional online PIN which wouldn’t be mentioned on the plastic card.
There was boost in online use of debit/credit cards after the launch of online railway and flight bookings. The IRCTC, makemytrip and yatra.com websites are getting maximum customers. According to bankers, now most of the credit card customers have also started paying their utility bills such as mobile and electricity through net banking.
According to RSA report, in India major banks have lost funds of around Rs 36.5 crore because of fraudulent transactions and 13,000 such cases were filed in India.
KVS Manian, group head retail liabilities & branch banking, Kotak Mahindra Bank pointed out, “The two-stage security screening makes the possibility of fraud or theft of username and password of a customer nearly impossible as it involves simultaneous use of multiples gadgets like a computer and mobile phone”. The main reason for security breach is carelessness on the part of the customer.
Thursday, August 6, 2009
RBI approves cash withdrawal using debt card at merchant establishment
In many countries worldwide you can withdraw cash at retail outlets using point of sale terminals through debit cards. Recently the Reserve Bank of India (RBI) has given approval for this facility. At present you can use debit card to withdraw cash only at ATMs. But now you will be able to draw cash at the nearest shop using the debit card.
As per RBI approval you can withdraw cash using the swipe machines at retail shops. In the beginning around 14.3 crore people holding debit cards issued in India will be able to avail this facility. Debit card holders can withdraw cash up to Rs 1,000 directly from merchant establishments. Moreover you are not required to purchase anything from the shop to avail this facility. But you might have to pay a fee of 2-3%.
In case a cardholder does purchasing at the same shop then the receipt must have a separate indication of the cash withdrawal. To offer this facility the swipe machines, or point-of-sale (PoS) terminals, will have to be upgraded and it might take a month for the smooth flow of this service. The banks might divide the service charge with retailers in order to persuade them to offer this service.
Currently for every card transaction merchants have to pay fee of 1.5-2 per cent. The customers of smaller towns and rural areas will be most benefited from this service, where few ATM machines are available. This facility will also increase the use of debit cards ast PoS- enabled merchant establishments. The retailers offering this facility will be able to deposit less amount of money which they are required to deposit in a bank every day as he can use this amount to disburse it for a fee. For banks increase in usage of debit card means increase in fee income.
The RBI stated the merchant establishment which has been designated by the bank after thorough checking can avail this facility. RBI has clearly stated that the merchants will offer cash withdrawal facility at PoS terminals irrespective of the fact the debit card holder does the purchasing from that shop. In the near future it might be possible to set up ATMs therefore a POS terminal can be a cheaper alternative for banks. Once smooth operation of this service starts the customers living in rural areas won’t have to travel to withdraw money.
At present most of the people use their debit card to withdraw money from ATMs and only 2-3 percent of PSU bank customers make payments through debit cards, whereas around 14-19 percent of the customers of private and foreign banks use debit card to make payments.
The RBI has said the boards of banks have to decide to whom to offer this service after taking into consideration the product profile, risk sensitivity and risk alleviation measures. Once the board has given the approval the banks will be required to get one-time approval from the RBI.
The RBI decision to allow debit card holders to withdraw money at POS terminals reveals that there has been a steady increase in the number of terminals at different merchant establishments. By the end of May 31, 2009, the number of POS terminals increased to 4.70 lakh in the country as against about 45,000 ATMs.
Once the cash withdrawal facility at PoS terminals starts bank customers won’t have to depend on either branches or ATMs to draw small amounts. They can simply go to nearby merchant establishment, swipe their debit card and take the cash from the merchant. This move will also help in promoting financial inclusion.
On banks part, to offer this facility they will have to formulate a proper customer grievance redressal mechanism.
As per RBI approval you can withdraw cash using the swipe machines at retail shops. In the beginning around 14.3 crore people holding debit cards issued in India will be able to avail this facility. Debit card holders can withdraw cash up to Rs 1,000 directly from merchant establishments. Moreover you are not required to purchase anything from the shop to avail this facility. But you might have to pay a fee of 2-3%.
In case a cardholder does purchasing at the same shop then the receipt must have a separate indication of the cash withdrawal. To offer this facility the swipe machines, or point-of-sale (PoS) terminals, will have to be upgraded and it might take a month for the smooth flow of this service. The banks might divide the service charge with retailers in order to persuade them to offer this service.
Currently for every card transaction merchants have to pay fee of 1.5-2 per cent. The customers of smaller towns and rural areas will be most benefited from this service, where few ATM machines are available. This facility will also increase the use of debit cards ast PoS- enabled merchant establishments. The retailers offering this facility will be able to deposit less amount of money which they are required to deposit in a bank every day as he can use this amount to disburse it for a fee. For banks increase in usage of debit card means increase in fee income.
The RBI stated the merchant establishment which has been designated by the bank after thorough checking can avail this facility. RBI has clearly stated that the merchants will offer cash withdrawal facility at PoS terminals irrespective of the fact the debit card holder does the purchasing from that shop. In the near future it might be possible to set up ATMs therefore a POS terminal can be a cheaper alternative for banks. Once smooth operation of this service starts the customers living in rural areas won’t have to travel to withdraw money.
At present most of the people use their debit card to withdraw money from ATMs and only 2-3 percent of PSU bank customers make payments through debit cards, whereas around 14-19 percent of the customers of private and foreign banks use debit card to make payments.
The RBI has said the boards of banks have to decide to whom to offer this service after taking into consideration the product profile, risk sensitivity and risk alleviation measures. Once the board has given the approval the banks will be required to get one-time approval from the RBI.
The RBI decision to allow debit card holders to withdraw money at POS terminals reveals that there has been a steady increase in the number of terminals at different merchant establishments. By the end of May 31, 2009, the number of POS terminals increased to 4.70 lakh in the country as against about 45,000 ATMs.
Once the cash withdrawal facility at PoS terminals starts bank customers won’t have to depend on either branches or ATMs to draw small amounts. They can simply go to nearby merchant establishment, swipe their debit card and take the cash from the merchant. This move will also help in promoting financial inclusion.
On banks part, to offer this facility they will have to formulate a proper customer grievance redressal mechanism.
Friday, July 31, 2009
Barclays credit cardholders get SMS facility
Barclays Bank Plc, credit card customers get mobile banking facility under this they will be able to access their accounts through SMS. A press release issued by Bank stated this facility is being offered free of charge to both its existing and new credit card customers.
The release added using this facility the customers will be able to check their current outstanding balance, mini-statement details and payment details of their credit card by simply sending text messages. The customer can send SMS on 56161 with the required instructions. Charges are applicable on every SMS sent, levied by the mobile services provider of the customer.
Barclays Bank Plc India's Interim Managing Director, Mr Ram Gopal, informed that “mobile technology is quickly becoming a leading source of convenience for customers as more and more customers want information on the move...the current offering from Barclays card, we believe, will add greater convenience to our customers' interactions with the bank.''
The release added using this facility the customers will be able to check their current outstanding balance, mini-statement details and payment details of their credit card by simply sending text messages. The customer can send SMS on 56161 with the required instructions. Charges are applicable on every SMS sent, levied by the mobile services provider of the customer.
Barclays Bank Plc India's Interim Managing Director, Mr Ram Gopal, informed that “mobile technology is quickly becoming a leading source of convenience for customers as more and more customers want information on the move...the current offering from Barclays card, we believe, will add greater convenience to our customers' interactions with the bank.''
Monday, July 27, 2009
Customers prefer debit cards to credit cards
Now day’s customers prefer debit cards to credit cards, mainly because of shift in strategy from their banks.
One of the bank customers Kumud Hirawal reached out for her debit card rather than her credit card.
Some of the banks like ICICI have nearly stopped issuing of new credit cards and even canceling the existing cards of the defaulters. Moreover the banks are publicizing attractive offers to get back their customers such as Kumud to shift to their debit cards.
It is believed the increase in preference of debit card in the industry is due to banks increasing push for debit card usage combined with the customer’s cautiousness with regard to high credit card charges.
According to data for the first two months of the fiscal year there has been 15% of decrease in the payments made by credit card whereas there is increase of more than 40% in the usage of debit cards for the same period.
Moreover there has been 12% decline in the issuances of fresh credit card and there has been overall increase from 80% to 86% in the share of debit cards.
Currently bankers have started making stringent checks on the credit histories of the credit card customers which has raised fear amongst them that customers might default on their credit card payments.
A customer pointed out, “Banks are using CIBIL products and services extensively in their risk management process, at every stage of the customer lifecycle".
The sentiments expressed by some of the country’s bankers have given indication of purposeful shift in their strategy.
Aditya Puri, MD of HDFC Bank, pointed out, "I am issuing cards to customers who will pay my money back."
However Romesh Sobti, MD and CEO of IndusInd Bank, stated, "We are looking to revive our emphasis on debit cards for our customers."
It clearly indicates that banks are trying ways to improve their credit card portfolios which have been badly hit due to increase in default rate and the customers are also preferring a debit card in hand rather than having two credit cards.
One of the bank customers Kumud Hirawal reached out for her debit card rather than her credit card.
Some of the banks like ICICI have nearly stopped issuing of new credit cards and even canceling the existing cards of the defaulters. Moreover the banks are publicizing attractive offers to get back their customers such as Kumud to shift to their debit cards.
It is believed the increase in preference of debit card in the industry is due to banks increasing push for debit card usage combined with the customer’s cautiousness with regard to high credit card charges.
According to data for the first two months of the fiscal year there has been 15% of decrease in the payments made by credit card whereas there is increase of more than 40% in the usage of debit cards for the same period.
Moreover there has been 12% decline in the issuances of fresh credit card and there has been overall increase from 80% to 86% in the share of debit cards.
Currently bankers have started making stringent checks on the credit histories of the credit card customers which has raised fear amongst them that customers might default on their credit card payments.
A customer pointed out, “Banks are using CIBIL products and services extensively in their risk management process, at every stage of the customer lifecycle".
The sentiments expressed by some of the country’s bankers have given indication of purposeful shift in their strategy.
Aditya Puri, MD of HDFC Bank, pointed out, "I am issuing cards to customers who will pay my money back."
However Romesh Sobti, MD and CEO of IndusInd Bank, stated, "We are looking to revive our emphasis on debit cards for our customers."
It clearly indicates that banks are trying ways to improve their credit card portfolios which have been badly hit due to increase in default rate and the customers are also preferring a debit card in hand rather than having two credit cards.
Friday, July 24, 2009
Using Credit Card to do big purchases show your ID PROOF
Now if you plan to do purchasing of big amount using your credit card then you have to proof your identity. Banks and payment processing firms such as Visa Inc. and MasterCard Worldwide have started a new drive under which you will be requested to provide an ID proof. This new drive has been started in order to prevent the fraudulent use of credit and debit cards.
Recently Rupesh Shah, 30-year-old purchased 32-inch LCD television set at a Croma store in Mumbai. He offered his credit card to make payment of Rs 40,500 but the store man asked him to provide proof of identity.
ICICI Bank Ltd. Is country’s largest credit card issuer among the private sector bank with around 8.5 million cards, has informed its customers that they might have to provide their identity proof at merchant outlets (or stores) in case do purchasing of big amount using credit card.
Although most banks have directed merchants to check the identity proof when a customer makes high-value payment with credit card in order to prevent fraudulent transactions but some of them have taken this responsibility on themselves. For instance Praveen Bansal, deputy general manager, transaction banking department, state owned bank Union Bank of India, told, “Written to all our credit and debit card holders to register their mobile phone numbers with the bank. For transactions over Rs500 on credit or debit cards, we send an SMS to the customer giving details of the transactions”.
However some of the customers are reluctant to produce ID card every time they do purchasing of high-value with credit cards but most of them have realized that this measure will protect their money, too.
Ravi Prakash Jha, store manager at an outlet of The Mobile Store in Mumbai, a chain that sells wireless phones and accessories said, “We ask for an identity proof from people who make purchases of Rs7,000 and above on their credit or debit cards”. “Consumers are hesitant to show their identity proof, but they are cooperating with us because we tell them that this process will help prevent misuse of their cards.”
Although some of the consumers agree, with the usefulness of the ID measures. Sandeep Tiwari, an accounts manager with a real estate developer who was asked for an ID proof when he bought a Nokia phone for Rs8,000 at The Mobile Store told, “It’s a good way to prevent misuse of cards and avoid fraudulent transaction, but I feel that this is not a foolproof plan because it’s very easy for fraudsters to forge identity proof such as driving license, and they can still misuse the card”.
However there is variation in the definition of high-value transactions across banks and merchant establishments. According to anonymous official working with a payments processing company, “a customer will have to provide an identity proof for purchases of Rs7,500 and above at a jewellery store, purchases of over Rs5,000 at a mobile store and purchases of over Rs8,000 at an electronic showroom”.
C.S. Jain, executive director, head of personal banking group, IDBI Bank informed IDBI Bank Ltd, for instance, has directed merchant outlets to check the ID proof of the card users doing purchasing of worth exceeding Rs10,000. “IDBI Bank debit card holders receive SMS alerts for any transaction over Rs10,000. These are the steps the bank takes to check frauds.”
According to the Reserve Bank of India (RBI) data provide in July bulletin in India by 31 May, there are around 48.42 million credit cards users with a total outstanding amount of Rs9,748.31 crore. Whereas by the end of May there are around 283.58 million debit card users in the country, and the spending on debit cards amounted to Rs3,665.91 crore, according to the central bank’s figures.
The senior official from a payments processing company quoted in the first instance, “The fraud to sales ratio in India is at 0.12 which means of every Rs100 spent 12 paise is lost”. “The fraud ratio is not alarming. It has been stable at around 0.12 for the past two-three years, but to ensure it remains low, we have introduced this best practice.”
A senior official with Axis Bank Ltd has 600,000 credit cards and 125,000 point-of-sale (PoS) terminals informed, “Fraudsters usually rob cards and make purchases of electronic items and jewellery as they have resale value.” PoS terminals are machines that read credit or debit card information and approve or reject a transaction.
An anonymous person said, “Frauds are also rampant at curio shops, which are largely visited by tourists. Certain cities like Agra, Coimbatore and Chennai are places where card frauds are rampant”.
In February, then minister of state for home affairs Shakeel Ahmad had informed the Lok Sabha that between April and December 2008, ICICI Bank had informed the RBI about 8,280 cases of credit card fraud worth Rs11.47 crore.
While American Express Banking Corp. accounted 703 cases due to which it faced a loss of about Rs6.04 crore and on the other hand 2,484 cases of fraud were reported by Hong Kong and Shanghai Banking Corp. (HSBC) due to which it faced a loss of Rs4.90 crore, Ahmad told Parliament. The other foreign banks which also listed the loss were Citibank incurred losses of Rs4.73 crore, Standard Chartered Bank, reported Rs2.39 crore and Deutsche Bank, Rs2.09 crore, all during the same period.
Recently Rupesh Shah, 30-year-old purchased 32-inch LCD television set at a Croma store in Mumbai. He offered his credit card to make payment of Rs 40,500 but the store man asked him to provide proof of identity.
ICICI Bank Ltd. Is country’s largest credit card issuer among the private sector bank with around 8.5 million cards, has informed its customers that they might have to provide their identity proof at merchant outlets (or stores) in case do purchasing of big amount using credit card.
Although most banks have directed merchants to check the identity proof when a customer makes high-value payment with credit card in order to prevent fraudulent transactions but some of them have taken this responsibility on themselves. For instance Praveen Bansal, deputy general manager, transaction banking department, state owned bank Union Bank of India, told, “Written to all our credit and debit card holders to register their mobile phone numbers with the bank. For transactions over Rs500 on credit or debit cards, we send an SMS to the customer giving details of the transactions”.
However some of the customers are reluctant to produce ID card every time they do purchasing of high-value with credit cards but most of them have realized that this measure will protect their money, too.
Ravi Prakash Jha, store manager at an outlet of The Mobile Store in Mumbai, a chain that sells wireless phones and accessories said, “We ask for an identity proof from people who make purchases of Rs7,000 and above on their credit or debit cards”. “Consumers are hesitant to show their identity proof, but they are cooperating with us because we tell them that this process will help prevent misuse of their cards.”
Although some of the consumers agree, with the usefulness of the ID measures. Sandeep Tiwari, an accounts manager with a real estate developer who was asked for an ID proof when he bought a Nokia phone for Rs8,000 at The Mobile Store told, “It’s a good way to prevent misuse of cards and avoid fraudulent transaction, but I feel that this is not a foolproof plan because it’s very easy for fraudsters to forge identity proof such as driving license, and they can still misuse the card”.
However there is variation in the definition of high-value transactions across banks and merchant establishments. According to anonymous official working with a payments processing company, “a customer will have to provide an identity proof for purchases of Rs7,500 and above at a jewellery store, purchases of over Rs5,000 at a mobile store and purchases of over Rs8,000 at an electronic showroom”.
C.S. Jain, executive director, head of personal banking group, IDBI Bank informed IDBI Bank Ltd, for instance, has directed merchant outlets to check the ID proof of the card users doing purchasing of worth exceeding Rs10,000. “IDBI Bank debit card holders receive SMS alerts for any transaction over Rs10,000. These are the steps the bank takes to check frauds.”
According to the Reserve Bank of India (RBI) data provide in July bulletin in India by 31 May, there are around 48.42 million credit cards users with a total outstanding amount of Rs9,748.31 crore. Whereas by the end of May there are around 283.58 million debit card users in the country, and the spending on debit cards amounted to Rs3,665.91 crore, according to the central bank’s figures.
The senior official from a payments processing company quoted in the first instance, “The fraud to sales ratio in India is at 0.12 which means of every Rs100 spent 12 paise is lost”. “The fraud ratio is not alarming. It has been stable at around 0.12 for the past two-three years, but to ensure it remains low, we have introduced this best practice.”
A senior official with Axis Bank Ltd has 600,000 credit cards and 125,000 point-of-sale (PoS) terminals informed, “Fraudsters usually rob cards and make purchases of electronic items and jewellery as they have resale value.” PoS terminals are machines that read credit or debit card information and approve or reject a transaction.
An anonymous person said, “Frauds are also rampant at curio shops, which are largely visited by tourists. Certain cities like Agra, Coimbatore and Chennai are places where card frauds are rampant”.
In February, then minister of state for home affairs Shakeel Ahmad had informed the Lok Sabha that between April and December 2008, ICICI Bank had informed the RBI about 8,280 cases of credit card fraud worth Rs11.47 crore.
While American Express Banking Corp. accounted 703 cases due to which it faced a loss of about Rs6.04 crore and on the other hand 2,484 cases of fraud were reported by Hong Kong and Shanghai Banking Corp. (HSBC) due to which it faced a loss of Rs4.90 crore, Ahmad told Parliament. The other foreign banks which also listed the loss were Citibank incurred losses of Rs4.73 crore, Standard Chartered Bank, reported Rs2.39 crore and Deutsche Bank, Rs2.09 crore, all during the same period.
Thursday, July 9, 2009
Credit card reward programs becoming less attractive
Now day’s banks at the time of issuing credit cards are taking cautions and mostly issuing premium category credit cards to the premium segment of the society in order to come out of huge credit losses. Similarly banks are also planning to cut down the rewards they give to credit card holders to reduce credit losses. Therefore banks are making it more expensive and giving less attractive gifts on redemption of reward points. It is believed this can further get worse ahead of possible legislation to reduce so-called interchange rates, the fees banks charge to merchants.
Analysts’ points out banks use income from the fees to finance their rewards, thus any reduction in those charges will cut loyalty programs. This means the customers will have to use their cards frequently to earn the points. Last year the banks increased interchange fees to 14 percent to about $48 billion, ranging from 1.6 percent to more than two percent of total purchases.
In recent years credit card companies like American Express, JPMorgan Chase and Citigroup had earned hefty profits due to an explosion in credit, but now they are running in lose in billions as debt-burdened Americans lose jobs and default on loan payments. According to analysts credit card industry will only be able to make firm standing by 2011.
Previously in this year, Citigroup customized its “Thank You” rewards program in which many more points were required to redeem the reward. While JPMorgan, had limited the spending categories in which customers received cash back on Chase Freedom cards. According to analysts American Express flagship Membership Rewards program is like a magnet for customers in case any cut done in the program can lower the customer’s interest in the company’s cards and upset revenue earned. As most of the global banks are making ways for the new reward systems hence Indian banks might soon follow the suit.
Analysts’ points out banks use income from the fees to finance their rewards, thus any reduction in those charges will cut loyalty programs. This means the customers will have to use their cards frequently to earn the points. Last year the banks increased interchange fees to 14 percent to about $48 billion, ranging from 1.6 percent to more than two percent of total purchases.
In recent years credit card companies like American Express, JPMorgan Chase and Citigroup had earned hefty profits due to an explosion in credit, but now they are running in lose in billions as debt-burdened Americans lose jobs and default on loan payments. According to analysts credit card industry will only be able to make firm standing by 2011.
Previously in this year, Citigroup customized its “Thank You” rewards program in which many more points were required to redeem the reward. While JPMorgan, had limited the spending categories in which customers received cash back on Chase Freedom cards. According to analysts American Express flagship Membership Rewards program is like a magnet for customers in case any cut done in the program can lower the customer’s interest in the company’s cards and upset revenue earned. As most of the global banks are making ways for the new reward systems hence Indian banks might soon follow the suit.
Tuesday, July 7, 2009
HSBC directed to pay penalty for not refunding balance on deactivation of credit card
The HSBC has been directed to pay penalty of Rs 2,250 to a complainant for closing his credit card account without refunding him the due balance. The District Consumer Disputes Redressal Forum has also instructed the bank to pay Rs 1,100 as litigation costs.
The complainant, Narender Rana, a resident of Sector 35, got the credit card from the bank and was renewed in July 2008 with a limit of Rs 21,000 and expiry date was of August 2011.
He alleged that the renewed card never became operational and the bank closed the account, without giving any reasons
The complainant also informed that he had used his credit card for booking a flight ticket from Chandigarh to Delhi on April 25, 2008 (before the renewal of the card) and had paid Rs 2,379 for it. As the flight was cancelled, the Airlines gave a refund of Rs 2,250 was to the credit card account of the complainant, which could not be added to his account as his card was not operational.
He got up set therefore he moved the consumer forum.
In its reply, the bank stated Rana had never been a fervent user of the card and that he scarcely made transactions with the card.
The bank said the complainant was already informed that if the said card was not used for any transaction up to June 30, 2008, it would be closed. As the complainant did not use the card within the set period, his card account was closed and a letter was duly sent to him vide dated May 29, 2008.
Also, Rana was asked to contact the bank officer for the withdrawal of the amount lying in his credit card account, but he never turned up to meet the concerned official, maintained the bank.
But the forum, said at the time of deactivating the card, the bank should have immediately refunded the said amount of Rs 2,250.
The complainant, Narender Rana, a resident of Sector 35, got the credit card from the bank and was renewed in July 2008 with a limit of Rs 21,000 and expiry date was of August 2011.
He alleged that the renewed card never became operational and the bank closed the account, without giving any reasons
The complainant also informed that he had used his credit card for booking a flight ticket from Chandigarh to Delhi on April 25, 2008 (before the renewal of the card) and had paid Rs 2,379 for it. As the flight was cancelled, the Airlines gave a refund of Rs 2,250 was to the credit card account of the complainant, which could not be added to his account as his card was not operational.
He got up set therefore he moved the consumer forum.
In its reply, the bank stated Rana had never been a fervent user of the card and that he scarcely made transactions with the card.
The bank said the complainant was already informed that if the said card was not used for any transaction up to June 30, 2008, it would be closed. As the complainant did not use the card within the set period, his card account was closed and a letter was duly sent to him vide dated May 29, 2008.
Also, Rana was asked to contact the bank officer for the withdrawal of the amount lying in his credit card account, but he never turned up to meet the concerned official, maintained the bank.
But the forum, said at the time of deactivating the card, the bank should have immediately refunded the said amount of Rs 2,250.
Friday, July 3, 2009
Four persons of well-to-do families arrested for credit card racket
With the arrest of four persons the special detection squad of superintendent of police headed by PSI Prakash attached to Mangalore Rural police station has been able to break through credit card racket. Among the four arrested persons the police have arrested the district NSUI president Tejaswi Rai. on October 19, 2008 the accused had purchased five mobile phones worth Rs 1.01 lakh from Span Telecom using fake credit cards.
The four accused are Tejaswi Raj (27) of Hat Hill, Lady Hill, Mangalore, Muhammad Riyas (25) of Melkar in Bantwal taluk, Abdul Majid (34) of Attavar, Mangalore and Sajid of Farnagipete, Mangalore, all from the well-to-do families. Riyas is the son of a forest department official; Majid is a partner in a gold jewellery firm, and Raj the district head of NSUI. The four accused were arrested while they were traveling in a car near Mahavir Circle on the outskirts of the city, and handed over to jurisdictional Mangalore South police station personnel.
According to a released statement by the police, it has information about the accused having used fake credit cards in other places in the city as well and the same is being verified. It is believed the accused carried out credit card racket to fund their luxurious and extravagant lifestyles.
The police was able to track the accused by a close examination of the video records, recorded in the closed circuit television camera installed at mobile stores when they did purchasing of mobile phones using fake credit cards. Prakash informed police is looking for more persons suspected to be involved in this racket and efforts are being made to arrest them. Meantime the four accused have been remanded to police custody up to July 3.
The four accused are Tejaswi Raj (27) of Hat Hill, Lady Hill, Mangalore, Muhammad Riyas (25) of Melkar in Bantwal taluk, Abdul Majid (34) of Attavar, Mangalore and Sajid of Farnagipete, Mangalore, all from the well-to-do families. Riyas is the son of a forest department official; Majid is a partner in a gold jewellery firm, and Raj the district head of NSUI. The four accused were arrested while they were traveling in a car near Mahavir Circle on the outskirts of the city, and handed over to jurisdictional Mangalore South police station personnel.
According to a released statement by the police, it has information about the accused having used fake credit cards in other places in the city as well and the same is being verified. It is believed the accused carried out credit card racket to fund their luxurious and extravagant lifestyles.
The police was able to track the accused by a close examination of the video records, recorded in the closed circuit television camera installed at mobile stores when they did purchasing of mobile phones using fake credit cards. Prakash informed police is looking for more persons suspected to be involved in this racket and efforts are being made to arrest them. Meantime the four accused have been remanded to police custody up to July 3.
Monday, June 22, 2009
Venkateswara College set up credit machine for convenience of parents and students
With a view to help parents and students one of the south campus college Sri Venkateswara College is planning to set up two credit machines in the college so that parents and students can easily deposit fees using debit and credit cards. Fees can also be deposited through demand drafts, cash and online through the Delhi University website www.du.ac.in.
College Principal Hemalatha Reddy explained, “We are taking up this initiative to expedite the admissions process and to cut down on long queues. We will accept all types of debit and credit cards, of all the banks, except American Express”.
Nirmal Kumar, the admissions conveyor at Sri Venkateswara, informed, “It takes hours to count cash. Besides, parents and students have to wait in long queues. We also often get complaints of duplicate Rs 500 notes. This computerized system will prevent that as well,” Kumar said.
He added, “As far as the college authorities are concerned, data will be available with the click of a button. It will reduce paper work as well”.
College Principal Hemalatha Reddy explained, “We are taking up this initiative to expedite the admissions process and to cut down on long queues. We will accept all types of debit and credit cards, of all the banks, except American Express”.
Nirmal Kumar, the admissions conveyor at Sri Venkateswara, informed, “It takes hours to count cash. Besides, parents and students have to wait in long queues. We also often get complaints of duplicate Rs 500 notes. This computerized system will prevent that as well,” Kumar said.
He added, “As far as the college authorities are concerned, data will be available with the click of a button. It will reduce paper work as well”.
Wednesday, May 13, 2009
Banks block unused credit cards to save themselves from losses
Recently two banks took the decision to block the credit cards which are not being used by the card holders and also block the cards with pending bills. This decision sent a wave of shock amongst the credit card users across the country. General Secretary of the Credit Card Holders Association of India (CGHAI) CV Giddappa told DNA the decision has been taken with an aim to encourage people to save.
The banks have taken this decision because they are facing losses thus they are blocking services. The bank charge Rs300 on credit card holders as maintenance charge and get 2.5% commission on every transaction made on the card. But when the credit cards are not used at all banks do not get commission. Since people are not using their credit card the maintenance charge that is being incurred is certainly much more than what is being charged.
Moreover the bank does not earn any income by maintaining the accounts of the customers who don’t use the services. In Bangalore around 40 credit card companies are facing losses and from the last two months no new credit card has been issued by the banks. Only two Indian banks are issuing credit cards on the bases of customers meeting the criteria. Issuing of new cards has been left to the banks’ discretion.
Blocking accounts and transactions has been left to the bank’s discretion therefore they are working according to the guidelines issued by the Banking Codes and Standard Board thus not violating any norms of RBI or the board. Notices are issued to the cardholders before blocking their accounts.
But once a card has been blocked by one bank, then no other bank can issue a credit card again as the account holder's name is listed in the Credit Information Bureau of India Limited (Cibil) list. This list was issued in 2005 and sets a scale of 0-75 (0 being the lowest and 75 being the highest credit limit). The credit limit of most of the people staying in Bangalore is above the 30 mark, signifying their credit limit is increasing. Banks do not want any further increase in this limit.
As this problem was not predicted therefore at present there is no solution. A special committee is being set up comprising of experts various banks and economists who will review the problem and sought out a solution within six months. The main aim behind blocking of credit cards is to motivate people for savings and look for other alternatives of investment. A campaign has been started for the voluntary surrendering of cards.
The banks have taken this decision because they are facing losses thus they are blocking services. The bank charge Rs300 on credit card holders as maintenance charge and get 2.5% commission on every transaction made on the card. But when the credit cards are not used at all banks do not get commission. Since people are not using their credit card the maintenance charge that is being incurred is certainly much more than what is being charged.
Moreover the bank does not earn any income by maintaining the accounts of the customers who don’t use the services. In Bangalore around 40 credit card companies are facing losses and from the last two months no new credit card has been issued by the banks. Only two Indian banks are issuing credit cards on the bases of customers meeting the criteria. Issuing of new cards has been left to the banks’ discretion.
Blocking accounts and transactions has been left to the bank’s discretion therefore they are working according to the guidelines issued by the Banking Codes and Standard Board thus not violating any norms of RBI or the board. Notices are issued to the cardholders before blocking their accounts.
But once a card has been blocked by one bank, then no other bank can issue a credit card again as the account holder's name is listed in the Credit Information Bureau of India Limited (Cibil) list. This list was issued in 2005 and sets a scale of 0-75 (0 being the lowest and 75 being the highest credit limit). The credit limit of most of the people staying in Bangalore is above the 30 mark, signifying their credit limit is increasing. Banks do not want any further increase in this limit.
As this problem was not predicted therefore at present there is no solution. A special committee is being set up comprising of experts various banks and economists who will review the problem and sought out a solution within six months. The main aim behind blocking of credit cards is to motivate people for savings and look for other alternatives of investment. A campaign has been started for the voluntary surrendering of cards.
Tuesday, May 5, 2009
Study reveals half of credit, debit cards in India inactive
According to survey data almost half of debit and credit cards in India are inactive may be because of insufficient resources in bank accounts and a holding of more than one card.
According to the survey done by Edgar, Dunn & Company (EDC) and India Cards Council (ICC) in contrast to UK and Australia where 90 per cent cards are active, in India there are only 56 per cent active debit cards. The study revealed, "There is a very low level of debit card usage at POS (Point of Sale) compared to other countries. For example: 26 per cent of active debit cards used at POS versus 86 per cent in the US and 45 per cent in Australia".
According to study, "The very low costs associated with new cardholder acquisition may indicate that insufficient resources are being applied to checking credit worthiness of applicants". It further added another reason possibly will be because of insufficient resources in cardholder’s bank accounts.
EDC informed debit cards are basically used for ATM withdrawals, to support cash-based transactions. Even in the credit card segment, India is having only 56 per cent active cards as against 80 per cent in Australia and 75 per cent in Singapore, the study revealed. EDC added in India the credit losses are also relatively high due to low level of transaction volume and value across the card base.
According to the survey done by Edgar, Dunn & Company (EDC) and India Cards Council (ICC) in contrast to UK and Australia where 90 per cent cards are active, in India there are only 56 per cent active debit cards. The study revealed, "There is a very low level of debit card usage at POS (Point of Sale) compared to other countries. For example: 26 per cent of active debit cards used at POS versus 86 per cent in the US and 45 per cent in Australia".
According to study, "The very low costs associated with new cardholder acquisition may indicate that insufficient resources are being applied to checking credit worthiness of applicants". It further added another reason possibly will be because of insufficient resources in cardholder’s bank accounts.
EDC informed debit cards are basically used for ATM withdrawals, to support cash-based transactions. Even in the credit card segment, India is having only 56 per cent active cards as against 80 per cent in Australia and 75 per cent in Singapore, the study revealed. EDC added in India the credit losses are also relatively high due to low level of transaction volume and value across the card base.
Wednesday, April 29, 2009
Banks cutting on credit limit can misuse of credit card
In the past few years India has become the fast growing credit card market in the world. It has almost touched the $30 million mark. This was possible due to availability of cheap and easy availability of credit which also helped in the boom of the economy. As Indian adopted the new concept of purchasing with credit card and left behind their generations – old cautiousness before spending.
Right from the purchase of consumer goods, cars to property, for everything Indians used credit card. Moreover owning a credit card was considered as status symbol besides convenience.
Even the banks offered credit cards to any and everybody, but now seeing the increase in the default in payments of credit cards they are getting strict about granting credit and about non-payment.
Banks and financial institutions have started tightening by canceling the cards of the cardholders who have not fully paid their previous dues. Earlier banks were very liberal used to charge penalty in case of default in payments. But now the non-defaulters also have to feel the crunch as ICICI bank has cut down the cash limits for all its credit card users. As banks are facing liquidity crunch and there has been rise in defaults, approximately delinquency levels is at 15 per cent of an issuer’s portfolio therefore the institutions have started holding back. Banks are hardly issuing new cards and customers are being carefully scrutinized for their ability to pay and pay on time.
But many credit card holders are finding difficulty as they have got used to this piece of plastic. Most of them used card for almost everything whether buying a plasma television, a spanking new cell phone or even a holiday on a whim and on easy installments had become a lifestyle. Many times these goods and services were unaffordable and unnecessary but the option to pay in easy installments was too attractive that card holder could not resist. But many of the card holders did not know or did not want to know that the interest rate on such installments was almost usurious and they would end up paying a lot more than they had bargained for. On the other hand for banks such customers are very important and gave them ever higher credit limits.
America is facing credit card addiction. But in India the situation is still under control. The banks tightening norms for issuing credit card and cutting down credit limits can prove to be blessing in disguise to control the misuse of easy credit.
Right from the purchase of consumer goods, cars to property, for everything Indians used credit card. Moreover owning a credit card was considered as status symbol besides convenience.
Even the banks offered credit cards to any and everybody, but now seeing the increase in the default in payments of credit cards they are getting strict about granting credit and about non-payment.
Banks and financial institutions have started tightening by canceling the cards of the cardholders who have not fully paid their previous dues. Earlier banks were very liberal used to charge penalty in case of default in payments. But now the non-defaulters also have to feel the crunch as ICICI bank has cut down the cash limits for all its credit card users. As banks are facing liquidity crunch and there has been rise in defaults, approximately delinquency levels is at 15 per cent of an issuer’s portfolio therefore the institutions have started holding back. Banks are hardly issuing new cards and customers are being carefully scrutinized for their ability to pay and pay on time.
But many credit card holders are finding difficulty as they have got used to this piece of plastic. Most of them used card for almost everything whether buying a plasma television, a spanking new cell phone or even a holiday on a whim and on easy installments had become a lifestyle. Many times these goods and services were unaffordable and unnecessary but the option to pay in easy installments was too attractive that card holder could not resist. But many of the card holders did not know or did not want to know that the interest rate on such installments was almost usurious and they would end up paying a lot more than they had bargained for. On the other hand for banks such customers are very important and gave them ever higher credit limits.
America is facing credit card addiction. But in India the situation is still under control. The banks tightening norms for issuing credit card and cutting down credit limits can prove to be blessing in disguise to control the misuse of easy credit.
Wednesday, April 22, 2009
Banks to bear cost of ATM transactions, to go slow on issuing of debt-cum-ATM cards
After the implementation of the Reserve Bank of India directions for the free use of any ATMs for cash withdrawal from April 1 the banks have decided to go slow on the issuing of debit-cum-ATM cards.
As per information provided by top officials of different banks, a bank will have to pay anything between Rs 12 and Rs 18 for every transaction carried out at another bank’s ATM by its customer. An anonymous head of a public sector bank informed Business Line that, “This will mean a big hit on the banks as they cannot be passed on to the customers now. Even abroad, free transactions across ATMs are not offered for the same reason. I don’t see any reason for RBI’s rush to implement this from April 1”.
The big banks like SBI and large private banks might not find difficulty as they will have lesser outgo, but smaller banks having fewer ATMs might find difficult to bear the cost of ‘foreign’ ATM transactions by their customers.
Therefore some of the banks have searched a way out they will be cautious regarding the number of new cards to be issued. The official informed, “We are planning to discontinue giving ATM-debit cards to students and other categories that open loan accounts to cut costs”.
As per sources, most of the banks are yet to work out a mechanism to offer free ATM usage even after two weeks of implementation of the facility as per RBI directives.
Still the ATMs of many private sector banks — ICICI Bank, HDFC and Axis Bank, among some others are continuing to refuse transaction requests from customers of other banks, although they are denying it officially. A senior official of Axis Bank informed over phone from Mumbai that, “From day one, we are accepting all cards at all ATMs”.
The banks are even going to be cautious regarding the expansion of ATM network as the costs may work against this. Head of ATM operations at a large private sector bank informed, “A decision will depend on the cost of transactions at another bank’s ATMs vis-À-vis the cost of setting up new ATMs. Banks with large number of ATMs or very small number of ATMs may rethink their plans”.
Currently the cost of setting up of new ATM amounts to about Rs 8 lakh for installation and Rs 60,000-80,000 towards monthly maintenance expenses. It is expected that this might go up depending on rentals or real estate prices going up.
As per information provided by top officials of different banks, a bank will have to pay anything between Rs 12 and Rs 18 for every transaction carried out at another bank’s ATM by its customer. An anonymous head of a public sector bank informed Business Line that, “This will mean a big hit on the banks as they cannot be passed on to the customers now. Even abroad, free transactions across ATMs are not offered for the same reason. I don’t see any reason for RBI’s rush to implement this from April 1”.
The big banks like SBI and large private banks might not find difficulty as they will have lesser outgo, but smaller banks having fewer ATMs might find difficult to bear the cost of ‘foreign’ ATM transactions by their customers.
Therefore some of the banks have searched a way out they will be cautious regarding the number of new cards to be issued. The official informed, “We are planning to discontinue giving ATM-debit cards to students and other categories that open loan accounts to cut costs”.
As per sources, most of the banks are yet to work out a mechanism to offer free ATM usage even after two weeks of implementation of the facility as per RBI directives.
Still the ATMs of many private sector banks — ICICI Bank, HDFC and Axis Bank, among some others are continuing to refuse transaction requests from customers of other banks, although they are denying it officially. A senior official of Axis Bank informed over phone from Mumbai that, “From day one, we are accepting all cards at all ATMs”.
The banks are even going to be cautious regarding the expansion of ATM network as the costs may work against this. Head of ATM operations at a large private sector bank informed, “A decision will depend on the cost of transactions at another bank’s ATMs vis-À-vis the cost of setting up new ATMs. Banks with large number of ATMs or very small number of ATMs may rethink their plans”.
Currently the cost of setting up of new ATM amounts to about Rs 8 lakh for installation and Rs 60,000-80,000 towards monthly maintenance expenses. It is expected that this might go up depending on rentals or real estate prices going up.
Tuesday, March 17, 2009
Credit card usage dipped to 8%
From the past few months with the rise in inflation, and economic recession there has been increase in the number of defaulters of credit card holders. Most of the credit card holders stopped paying there credit card bills. Therefore not only the number of credit cards use has come down but also the spending through credit cards has dropped.
Card issuing companies have put credit controls in view of rising negligence levels have led to fall in spending through credit cards by 7.85 per cent to Rs 5,171.06 crore in January 2009, as against Rs 5,611.38 crore during April 2008. While in the corresponding period last year the spending had gone up by 28 per cent.
As per RBI data released earlier, the combined credit card outstanding had gone up by almost 70 per cent in the last one year. At the end of December 2008 the out standings had risen up to Rs 29,359 crore at the end of December 2008 from Rs 17,306 crore in the corresponding month of 2007. By looking at the figures it is clear that many card holders were rolling over credit.
According to the retail banking head of a large private bank, “It may be partly due to the fall in card population, but the average spend is also coming down.”
While a public sector bank executive added, “Due to the economic downturn, people are restricting unnecessary spending”.
Sujan Sinha, senior vice-president for retail banking at Axis Bank, pointed out, “Consumer spending on almost all fronts has come down, and there has also been a lot of culling in the industry”. Moreover banks have also cut down the issuing of credit cards by 282,000 during January to check losses arising from the portfolio.
As per latest data released by the Reserve Bank of India, the credit card holder number reduced by 8.62 per cent to 25.87 million at the end of January this year, as against 28.31 million at the start of the financial year. Whereas in contrast to this in April-January 2007-08, the number of credit cards rose by 13.32 per cent.
Axis Bank’s Sinha explained, “Credit cards of marginal customers and defaulters have been cancelled, and credit appraisal mechanisms have also become more elaborate. NPAs for almost all players in the industry have risen”.
Standard Chartered Bank’s country head for retail banking Shyam Srinivasan told that the number of credit card holder of his bank is more or less flat and do not aim to step up activity in the current economic situation.
For some banks the non-performing assets in the card segment is raising to over 20 per cent, as against 5-6 per cent during the last financial year, thus card issuers are more satisfied dealing with people who pay their bills on time.
For instance, in case of SBI Cards, according to rating agency Icra NPAs were estimated to 21.22 per cent as on September 30, 2008. To handle this, the company chose for foreclosures and settlements, due to which its card base has shrunk from 3.4 million to 3 million in the last six months. On asking about this the SBI Cards refused to comment.
Besides the other measures, the basic qualifying parameters have also been tightened. The threshold salary limit has been raised from Rs 8,000-10,000 to Rs 20,000-30,000. Bankers say they are more comfortable with customers with a higher salary base.
Tuesday, February 17, 2009
Software firm MD’s credit card skimmed
A Pune based Nitin Vasant Shimpi (42) has become the victim of online fraud. He reportedly told the bank authorities that Rs 93,737 worth of purchase had been made in July last year in his credit card in faraway Italy.
The most shocking part was that the credit card in question is with Shimpi and when the purchasing was done, he was in India. Shimpi a resident of Pallod Farms in Baner, has got the complaint registered in this regard with the Deccan Gymkhana police station.
Sub-inspector R D Patil of the Deccan Gymkhana police told, "It has been suspected the unidentified persons must have stolen the details of the credit card issued to Shimpi by the Axis Bank."
Patil notified that the suspect might have made a duplicate card by using the details, such as credit card number and card verification value number and made the purchases in Italy.
Shimpi, a managing director in a software firm located at Baner road got to know about the fraud when he received a call from the bank on July 25 asking him whether he had done purchasing worth Rs 93,737 in Italy.
Shimpi told TOI, "After seeing the transactions on my card, the bank officials got suspicious and informed me immediately. When I denied making any purchased in Italy, they blocked the card for safety purposes".
He pointed out that when he went to the bank to enquire about the purchases, the bank officials told him that the card was used at various shops and malls in Italy. On getting this confirmation, Shimpi filed a complaint with the Deccan Gymkhana police. "I don't know who and how my card was used in Italy," Shimpi said.
However a few incidents have been reported in the city where suspects used skimming (theft of credit card information used in an otherwise legitimate transaction) to steal credit card details, which have been later used to prepare duplicate and fake cards. The police informed, “The crime branch sleuths some months ago had nabbed a cashier of a five star hotel in the city who used to steal credit cards details of the customers in the hotel and prepare fake cards.”
The most shocking part was that the credit card in question is with Shimpi and when the purchasing was done, he was in India. Shimpi a resident of Pallod Farms in Baner, has got the complaint registered in this regard with the Deccan Gymkhana police station.
Sub-inspector R D Patil of the Deccan Gymkhana police told, "It has been suspected the unidentified persons must have stolen the details of the credit card issued to Shimpi by the Axis Bank."
Patil notified that the suspect might have made a duplicate card by using the details, such as credit card number and card verification value number and made the purchases in Italy.
Shimpi, a managing director in a software firm located at Baner road got to know about the fraud when he received a call from the bank on July 25 asking him whether he had done purchasing worth Rs 93,737 in Italy.
Shimpi told TOI, "After seeing the transactions on my card, the bank officials got suspicious and informed me immediately. When I denied making any purchased in Italy, they blocked the card for safety purposes".
He pointed out that when he went to the bank to enquire about the purchases, the bank officials told him that the card was used at various shops and malls in Italy. On getting this confirmation, Shimpi filed a complaint with the Deccan Gymkhana police. "I don't know who and how my card was used in Italy," Shimpi said.
However a few incidents have been reported in the city where suspects used skimming (theft of credit card information used in an otherwise legitimate transaction) to steal credit card details, which have been later used to prepare duplicate and fake cards. The police informed, “The crime branch sleuths some months ago had nabbed a cashier of a five star hotel in the city who used to steal credit cards details of the customers in the hotel and prepare fake cards.”
Tuesday, February 10, 2009
Credit card fraudsters arrested in New Delhi
In New Delhi a crime branch team arrested three persons who had cheated banks by obtaining credit cards using fake documents. Police told the three accused were Mohammad Naushad of Haulambi Kalan, Mohammad Nadeem and Junaid of DDA Flats had duped banks of around Rs 30 lakh using the credit cards issued to them.
Neeraj Thakur, DCP (crime and railways) said, "Posing as traders, they also managed to procured an EDC machine used to swipe cards during shopping and used it to make purchases.''
On receiving the complaint of fraudulent use of credit cards, a team led by ACP Sanjay Tyagi caught Naushad in Inderlok area on January 20. On interrogation he revealed that he had procured the credit card using a fake PAN card. Cops told Naushad owns a pan shop in the Inderlok while Nadeem has a garments shop.
Thakur informed, "The three opened a shop in partnership and got an EDC machine from a private Bank. They applied for and got a number of credit cards from different banks on the basis of fake identities. We recovered two PAN cards, seven credit cards, six debit cards and 12 cheque books of different banks from the accused.''
Neeraj Thakur, DCP (crime and railways) said, "Posing as traders, they also managed to procured an EDC machine used to swipe cards during shopping and used it to make purchases.''
On receiving the complaint of fraudulent use of credit cards, a team led by ACP Sanjay Tyagi caught Naushad in Inderlok area on January 20. On interrogation he revealed that he had procured the credit card using a fake PAN card. Cops told Naushad owns a pan shop in the Inderlok while Nadeem has a garments shop.
Thakur informed, "The three opened a shop in partnership and got an EDC machine from a private Bank. They applied for and got a number of credit cards from different banks on the basis of fake identities. We recovered two PAN cards, seven credit cards, six debit cards and 12 cheque books of different banks from the accused.''
Tuesday, January 20, 2009
Credit card complaints on top position in complaints registered
As per the annual report on ombudsman schemes released by the Reserve Bank of India (RBI) there has been increase in complaints about credit cards. According to report credit cards complaints have formed a major part of the grievances received by banking ombudsmen in financial year 2008 (April-March).
In 1995 RBI introduced the Banking Ombudsman Scheme to provide an ‘expeditious’ and ‘inexpensive’ forum to bank customers for resolution of their complaints relating to banking services. The grievances are related to the issuance of unsolicited credit cards and unsolicited insurance policy to the recovery of premium charges and annual fees, despite the cards being offered for free, and from the issuance of loans over phone, disputes over wrong billing and settlement offers conveyed telephonically to non-settlement of insurance claims after the demise of the card holder.
A general aspect of the customer complaints across the board was the problem in admittance of credit card issuers and poor response from call centers. Furthermore, the central bank report on ombudsmen scheme stated the card issuers often ascribed their mistakes in billing, accounting and reporting to technical snags. However, the report claimed on pursuing the complaints with card issuers, the charges debited were reversed in most cases without exception.
The reason behind increase in the number of complaints is misrepresentation and misleading information provided by direct sales agents as well as non-fulfillment of such oral promises made by these agents or bank officials at the time of marketing of products. However the complaints relating to failure on commitments made were placed at second place among those received at the offices of the banking ombudsmen.
The cases handled by ombudsmen disclosed that bankers are required to deal with customers in a more transparent manner, especially in making them aware of the terms and conditions of the sanction and the specific suggestions associated with them right at the beginning. The report stated rationality in product pricing by banks and their dealing with default situations are other areas which require added focus, as complaints on these fronts continue to come to the ombudsmen.
During FY08, ombudsmen received 47,887 complaints as against 38,638 received in FY07, therefore there is a rise of 24%, and around 89% were disposed of the total complaints (84% last year), with only 11% carried forward the next year.
Christmas sales increased consumers redeemed credit card points
Christmas celebration is the last festive fervor of the year therefore the consumers are busy redeeming their plastic points accumulated over the year, to take advantage of discounts and freebies at malls. Although retailers said sales volumes were not significantly larger than last year.
Consumers are able to redeem their credit card points after banks start offering a bigger basket of tie-ups with stores, restaurants and other retail destinations.
Consumers collect points on the use of their credit card. Each time he or she uses card to shop at a retail store that offers such schemes. Later on these points can be redeemed at the same store, or at other stores that have agreements with the card-issuing bank.
Over the years use of credit and debit cards has risen. For instance, the number of debit card users has gone up from 65 million to 100 million in two years. A banker told consumers spent 15-18% more on their credit cards this year in October (marking the beginning of the festive season) than they did in same month last year. He further said that the use of credit or debit cards on weekends continues to be high.
Ganesh Raman, head-marketing, Megamart, said: ``The trend of people using largely plastic money continues. About 60-65% of the purchase transactions are settled through cards at our 130 stores.'' However, he adds, there hasn't been a significant spurt in consumers redeeming points specifically at the year-end. ``People usually redeem points after 2-3 cycles of purchases,'' he said.
According to Damodar Mall, group customer director, Future Group, ``generally, people spend more on credit cards at modern retail stores, given the convenience factor and other benefits. In value store formats like Big Bazaar, credit card usage is to the extent of 35-40%, while in stores like Central, it is higher at about 45%.''
Mall reported that there is no specific shift in trend of consumers redeeming accumulated points, but he added that co-branded credit cards and shopping festivals had lifted shoppers' sentiments.
The Future group has launched the Great Indian Shopping Festival, which awards customers one ``sone ki chidiya sticker'' on every purchase of Rs 500. The more one amassed, the better the freebies one is entitled to. Similarly, Megamart's ``Smartone'' program provides special offers, previews of new products, and gifts. A shopper earns one point for every Rs 100 spent, and each point is worth 70 paise.
``On average, our store offers 30-35% discount on all Arvind and non-Arvind brands. However, during festival times, discounts go up to 50%. During special occasions, our bargain offers include buy-one-get-one-free,'' said Raman. He added that Megamart has seen a 10% to 12% decline in footfalls at his value-for-money stores, although he said it was not significant, considering the severity of the economic slowdown. ``On the other hand, we're attracting new customers who are shifting from expensive or premium apparel brands to economically priced ones,'' he said.
Friday, January 16, 2009
Credit card fraud busted housewife arrested
Kanika Buddhiraja (27) staying in Rana Pratap Bagh, to her neighbors is fashionable housewife. She did her schooling in a Mussoorie convent, graduation from one of the best colleges in
She did Rs 5 crore e-ticketing frauds along with the Thailand-based mother Karampal Kaur Shetty, Kanika the family had engineered over the last one year. The two, along with Kanika's brother Sarabjit Singh evidently started this "business'' two years ago soon after Kanika's father died.
Neeraj Thakur, DCP (crime and railways) told, the gang used to obtain airline and railway tickets online using credit card details allegedly acquired by Karampal, a Thai citizen, from her contacts. Police told in Thailand, a "packet'' of 400-500 credit card details can allegedly be obtained for 20,000 Bahts, easily..
"The gang took cash from customers, promising them cheap tickets. When the concerned airline or the bank tried to realize the money from the credit card owners, the card owner would threaten legal action for being charged for a journey they never undertook,'' said Thakur.
As per information of crime branch sleuths, credit cards of over 40 Indian and foreign banks were misused by the gang. In fact gang used one American Express premium card for buying 700 tickets over a period of two weeks.
According to Thakur, the affected airlines included Deccan Air (now Kingfisher Red), Kingfisher Airlines, Spicejet, Indigo and Air
Amid the three arrested from Kolkata is Naeem Ahmed (24). An officer informed "He is the one of the main brains behind the racket. He bought the tickets and his associates sold them to customers at heavily discounted rates''.
His co-conspirator Shahid Iqbal (25) owns a travel agency by the name of Chand Travels in Kolkata. He used to sell the tickets prepared by Naeem to his customers along with Feroz Alam (23) who runs another travel agency by the name of Janta Travels.
Monday, January 5, 2009
Kotak Bank to enter in corporate credit card biz
Kotak Mahindra Bank is planning to launch a corporate credit card product and will also be entering into partnership program for launching co-branded credit cards by April 2009.
Subrat Pani, Business Head (Cards), Kotak Mahindra Bank, in an interview told Business Line, “We are looking at entering into partnerships in the high-end segments in airline, retail and entertainment like movie or dining chain. An announcement in this regard is likely by January and launch by March or April”.
Earlier this year bank had entered the credit card business by launching two Visa Gold Cards, a Visa Platinum Card and a Visa Signature Card to complete the range of financial services from the Kotak Group.
Pani informed that since the launch seven months back, the bank has issued more than 1 lakh cards and is on course to meet the first year (April 2009) target of 2,50,000 cards.
He also added that yet the default rates have not started. “Typically, a write-off or a default happens after 180 days of consecutive non payment. So it is too early to comment on the default rates,” Pani added.
As per information provided by him, though there is no negative growth, the industry will not witness the compound annual growth rate (CAGR) of 38 per cent observe in the last five years.
“Last year, we saw a growth rate of 40 per cent when around Rs 58,000 crore was spent on credit cards. But this year, as compared with last year, the growth is likely to be around 24-25 per cent and end at around 22 per cent, which is likely to come down further to around 12 to 15 per cent next fiscal (2009-10),” he said.
However Pani, added that the industry growth will probably get rebound in 2010-11 to around 30-35 per cent when the spending might be between Rs 90,000 crore and Rs 1,00,000 crore.
Giving details about the usage pattern, he said that at present, the average spend per account per month stands to about 2.25 times more than the industry average (Rs 4,000) spending through gold cards.
Speaking about the future of the credit card business, Pani explained that in the next two years, the industry will be strictly taking care in terms of the kind and quality of customers to be taken on the portfolio.
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