The economy is recovering back thus several credit card issuers, including public and private sector banks are in the process of their credit card business. Earlier during the period of slowdown in 2009, the banks had slowed down the process of issuing the credit card and were adopting cautious approach while issuing card. But the banks have started pushing their credit card business.
HDFC has plans to increase its credit card business and will be issuing around 100,000 credit cards every month over the next couple of months. At present bank is issuing around 75,000 credit cards every month.
Parag Rao, head, product, portfolio and service delivery, credit cards, HDFC Bank told Financial Chronicle, “We have already scaled up our credit card business during the past three-four months. The credit card business has huge potential and we are hoping to distribute 100,000 cards every month.”
When asked do bank have any plans to bring back the earlier limits in credit and cash facilities, Parag stated that bank might do an upward revision for the cardholder. Parag said, “Revision of the credit limit is very common part of the credit card business and generally, the revision goes hand-in-hand with the economy”.
The senior official of SBI Cards also told the lender is in the process to revive its credit card business in a big way. The official said, “In past few months, we have started giving more reward points on credit card spends. We would shortly become aggressive in adding new customers, depending upon the status of economy.”
As per RBI data, in 2009 there was around 25 per cent decrease in the total number of cards in the system which was about 21 million cards from close 26.5 million cards a year ago.
Ranjan Dhawan, chief general manager, Punjab National Bank, said, “We would provide credit cards to our existing customers (subject to applying), who have a six-month-old account with the bank. The credit limit is depends upon many factors including salary and home and car ownership, among others. If someone owns a house, we do provide him/her higher limit.”
Even ICICI Bank, the largest card issuer of the country is going to scale up its credit card business.
However some banks say their main focus will be on increasing the profitability from the credit card business rather than just focusing on expansion of portfolio. J M Garg, chairman and managing director of Corporation Bank pointed out, “Very few credit card issuers are making profits. But, despite being a small card issuer, we are making profit from the card business. We wish to increase our size in terms of total outstanding numbers of card issued. Our prime focus would remain on remaining profitable and we would continue with same model.”
Tuesday, January 19, 2010
Wednesday, January 6, 2010
Private Banks reducing credit limit on credit cards
Again some of the banks are reducing the credit/cash limits on credit cards. The cardholders have come to know about this when some of the cardholders’ payments did not go through after swiping the card. So before swiping the credit card check your balance.
However some of the banks have informed their card-holders about the downward revision, but many of them came to know when their payments transactions did not get through.
Ms Benna, an Andhra Pradesh Government employee, told Business Line, “My credit limit was brought down to Rs 59,000 from Rs 80,000 while cash drawing facility was totally withdrawn by HSBC Bank.”
She said there has been no ‘provocation' from her side for reducing the limit as from the last one year she has been paying all the payments on time. The card-holders of other private banks such as ICICI Bank and HDFC Bank have told that their banks have also reduced the limits.
When enquired, ICICI Bank official told, “ICICI Bank follows prudent credit line management practices and as a result assesses the credit limits of its customers on an on-going basis. This can result in an increase or a decrease of credit line or cash lines. Our efforts on consolidation of our portfolio are seeing good results.”
While HDFC Bank official said that no general reduction has been done in limits. He added, “If it has happened, it may be due to some changes in customer profiles. We are actually bullish on the card segment.”
According to bankers the reduction in limits has been done due to two reasons. A senior official of a private bank pointed out, “The most immediate reason could be an intention to reduce exposure to unsecured portfolio on some early trends that could be disturbing.”
The other reason is less usage of card has forced banks to reduce the limit. A senior official of a foreign bank said, “We also reduce limits if a card is not fully used or mostly inactive.” For banks larger unused limit has been an issue for the banks, as technically card-holder can use it at any time. He explained that a higher limit that has unused for long time is to be kept as a reserve fund with no earnings.
According to experts, the reduction in limits done by banks generally, points towards the situation of credit card portfolios. an economist with SBI said, “Most of the banks have reduced their card exposures significantly during the last 12 months. The current reduction of limits shows their intention to reduce unsecured credit exposure.”
As per RBI figures in 2009 the total number of cards had shrink to about 21 million cards.
However some of the banks have informed their card-holders about the downward revision, but many of them came to know when their payments transactions did not get through.
Ms Benna, an Andhra Pradesh Government employee, told Business Line, “My credit limit was brought down to Rs 59,000 from Rs 80,000 while cash drawing facility was totally withdrawn by HSBC Bank.”
She said there has been no ‘provocation' from her side for reducing the limit as from the last one year she has been paying all the payments on time. The card-holders of other private banks such as ICICI Bank and HDFC Bank have told that their banks have also reduced the limits.
When enquired, ICICI Bank official told, “ICICI Bank follows prudent credit line management practices and as a result assesses the credit limits of its customers on an on-going basis. This can result in an increase or a decrease of credit line or cash lines. Our efforts on consolidation of our portfolio are seeing good results.”
While HDFC Bank official said that no general reduction has been done in limits. He added, “If it has happened, it may be due to some changes in customer profiles. We are actually bullish on the card segment.”
According to bankers the reduction in limits has been done due to two reasons. A senior official of a private bank pointed out, “The most immediate reason could be an intention to reduce exposure to unsecured portfolio on some early trends that could be disturbing.”
The other reason is less usage of card has forced banks to reduce the limit. A senior official of a foreign bank said, “We also reduce limits if a card is not fully used or mostly inactive.” For banks larger unused limit has been an issue for the banks, as technically card-holder can use it at any time. He explained that a higher limit that has unused for long time is to be kept as a reserve fund with no earnings.
According to experts, the reduction in limits done by banks generally, points towards the situation of credit card portfolios. an economist with SBI said, “Most of the banks have reduced their card exposures significantly during the last 12 months. The current reduction of limits shows their intention to reduce unsecured credit exposure.”
As per RBI figures in 2009 the total number of cards had shrink to about 21 million cards.
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