There are around thousands of credit card holders who have cleared their credit card dues but still their names are blacklisted in the bank’s central database due to which there names also exist on cibil defaulter list. The Reserve Bank of India (RBI) is formulating guidelines instructing the banks not to declare someone a defaulter if the person has settled his or her account with the bank after paying the negotiated amount.
Some of the card holders have got into negotiation with their banks and have paid some lump some amount but then also they are being treated as defaulter in the bank's records. Due to this their name displays in the defaulters list prepared by Credit Information Bureau of India Ltd (CIBIL), which depends on the information provided by banks for the purpose.
Thus most loans become off-limits for the 'blacklisted' person - be it a personal or house loan — from any bank or finance company. Due to this the customer has to settle the new bill raised by the bank, which is the 'balance amount' from the earlier settlement plus penalties and interest. A harassed customer Arvind Gupta (name changed), who is CEO of an IT company told, "The present practice is nothing short of blackmail of customers by banks".
He told recently he paid Rs 75,000 to clear his dues, which had previously been settled for 50% of the then outstanding amount — Rs 6,200 in 2001. It was compulsion for him to pay the amount because his home loan application was rejected by a bank as his name was in CIBIL's defaulter list.
An RBI spokesperson pointed out that central bank is aware of the matter and soon will provide an appropriate solution. CIBIL MD Arun Thukral said to solve this issue RBI held a series of meeting with banks and CIBIL. He told at present when a card holder gets into settlement with the bank, generally bank treats the rest of the amount as "written off".
In many cases, it has been observed that banks raise demand for a small left over amount, according to the customer which should not have been there at all. In many cases banks say they won’t charge the annual fees. For instance, In Arun Sharma (name changed), case who works for a big corporation, bank had raised bill of Rs 900 against his name and was told to settle dues by paying Rs 450 of the disputed bill.
But then also he continued to receive statements which first showed Rs 450 as outstanding and then the amount kept increasing. After sometime he received a call from the bank asking him to clear his dues of around Rs 1,000.
This time bank again offered to settle the dues for the 50% of the amount and said it will issue him an "all dues cleared" certificate if he made the payment. Sharma told he had paid Rs 500 but still he has not received certificate from the bank.
Friday, February 26, 2010
Banks encouraging use of debit card, tie-up with 3rd party to offer incentives
People those who do not have credit card prefer to make payments in cash. However some people are getting into habit of using debit card for making payments. Banks also want people should use debit card for this they are devising innovative ways by offering extra benefits on use of debit cards. Use of debit card will also help banks in reducing the cost of money transaction.
Taking lead on this matter State Bank of India (SBI) country’s largest lender has taken innovative measures to encourage customers to use debit card. Soon few of the foreign sector banks including Deustsche Bank, Citibank and Standard Chartered Bank are going to follow the suite.
Amongst the state-owned banks Punjab National Bank (PNB), Central Bank of India and Union Bank of India will be joining the bandwagon. To offer benefits on the use of debit card SBI in October 2009 inked an agreement with a loyalty and reward management company, Loyalty Rewardz. The agreement has been signed for three years. At present the SBI's debit card users in Mumbai will be covered in the tie-up. In Mumbai there are around 6.7 crore SBI debit card users. Bank sources said this facility will be extended for its entire customer base.
Amitabh Kumar, general manager (alternative channel) SBI explained, "We want to encourage our customers to use debit cards beyond withdrawing money from ATMs." Kumar claimed more SBI customers have started using debit card after the tie-up with the third party for the promotion of incentive schemes.
On every Rs 100 spent the SBI debit card holder gets 2.5 reward point as a standard reward at any of the point of sale (POS). And, if the customer gets the card swiped at the POS located in the premises of any of the program partners, then the reward to be awarded gets increased and it varies from company to company.
If a customer earns 1000 points on using the debit card, then he can get free tickets for watching movie, free apparel and so on. Bijaei Jayraj, chief executive officer, Loyalty Rewardz Mgmt told, "In fact we have got 20 lakh merchandising items on our platter to serve for the Freedom Rewardz customers."
At present there are 30-35 program partners of the Loyalty Rewardz including some of the big retail service providers such as John Player, Fame Cinema, Provogue in its fold.
In case the customer visits the bank branch to withdraw money through cheque approximately, the cost per transaction amounts to Rs 50 to the bank. Likewise, money withdrawn from an ATM costs to Rs 20.
Although the use of ATM by the customers have become bank neutral for cash withdrawal but it has increased burden on the big banks like SBI as their customers frequently with draw money form other bank’s ATM.
Taking lead on this matter State Bank of India (SBI) country’s largest lender has taken innovative measures to encourage customers to use debit card. Soon few of the foreign sector banks including Deustsche Bank, Citibank and Standard Chartered Bank are going to follow the suite.
Amongst the state-owned banks Punjab National Bank (PNB), Central Bank of India and Union Bank of India will be joining the bandwagon. To offer benefits on the use of debit card SBI in October 2009 inked an agreement with a loyalty and reward management company, Loyalty Rewardz. The agreement has been signed for three years. At present the SBI's debit card users in Mumbai will be covered in the tie-up. In Mumbai there are around 6.7 crore SBI debit card users. Bank sources said this facility will be extended for its entire customer base.
Amitabh Kumar, general manager (alternative channel) SBI explained, "We want to encourage our customers to use debit cards beyond withdrawing money from ATMs." Kumar claimed more SBI customers have started using debit card after the tie-up with the third party for the promotion of incentive schemes.
On every Rs 100 spent the SBI debit card holder gets 2.5 reward point as a standard reward at any of the point of sale (POS). And, if the customer gets the card swiped at the POS located in the premises of any of the program partners, then the reward to be awarded gets increased and it varies from company to company.
If a customer earns 1000 points on using the debit card, then he can get free tickets for watching movie, free apparel and so on. Bijaei Jayraj, chief executive officer, Loyalty Rewardz Mgmt told, "In fact we have got 20 lakh merchandising items on our platter to serve for the Freedom Rewardz customers."
At present there are 30-35 program partners of the Loyalty Rewardz including some of the big retail service providers such as John Player, Fame Cinema, Provogue in its fold.
In case the customer visits the bank branch to withdraw money through cheque approximately, the cost per transaction amounts to Rs 50 to the bank. Likewise, money withdrawn from an ATM costs to Rs 20.
Although the use of ATM by the customers have become bank neutral for cash withdrawal but it has increased burden on the big banks like SBI as their customers frequently with draw money form other bank’s ATM.
Tuesday, February 23, 2010
InduInd Bank to start credit cards, personal loans segments
A senior executive of IndusInd Bank informed the bank is planning to start credit cards and personal loans segments in the next financial year.
SV Parthasarthy, head of consumer finance at the private sector bank told, “We see good potential in these segments and are considering introducing these products in 2010-11.” Earlier till 2005-06 bank was in personal loans lending but it stopped when there was increase in delinquencies.
Last year during the economic slowdown most banks witnessed increase in bad loans in credit card and personal loan segments.
To keep control on delinquencies, now bankers are targeting influential customers who are having good relationship with the bank. IndusInd will be following the same strategy. Parthasarthy said, “We are looking to tap our existing customer base.”
He added, “A lot of mistakes have been made but there will possibly be a time when banks are bullish on this segment again. Banks have improved their customer screening processes and with the advent of CIBIL (credit information bureau), they now have more information on potential customers”.
IndusInd Bank Managing Director and CEO Romesh Sobti told the bank for the current financial year has planned to expand its retail loan book by 20 per cent. This will amount to 40 per cent of the bank’s Rs 19,090-crore loan book.
However in the vehicle loans segment IndusInd Bank has an important place. Bank’s commercial vehicle loan accounts for 19 per cent of its loan book whereas other vehicle loans amount to about 13%.
SV Parthasarthy, head of consumer finance at the private sector bank told, “We see good potential in these segments and are considering introducing these products in 2010-11.” Earlier till 2005-06 bank was in personal loans lending but it stopped when there was increase in delinquencies.
Last year during the economic slowdown most banks witnessed increase in bad loans in credit card and personal loan segments.
To keep control on delinquencies, now bankers are targeting influential customers who are having good relationship with the bank. IndusInd will be following the same strategy. Parthasarthy said, “We are looking to tap our existing customer base.”
He added, “A lot of mistakes have been made but there will possibly be a time when banks are bullish on this segment again. Banks have improved their customer screening processes and with the advent of CIBIL (credit information bureau), they now have more information on potential customers”.
IndusInd Bank Managing Director and CEO Romesh Sobti told the bank for the current financial year has planned to expand its retail loan book by 20 per cent. This will amount to 40 per cent of the bank’s Rs 19,090-crore loan book.
However in the vehicle loans segment IndusInd Bank has an important place. Bank’s commercial vehicle loan accounts for 19 per cent of its loan book whereas other vehicle loans amount to about 13%.
Friday, February 19, 2010
Kotak Mahindra Bank offers cash back facility on Trump Card
Kotak Mahindra Bank offers cash back facility on its Kotak Trump Card. Bank is offering 10% cash back on dining and movie and play spends. According to a statement issued by the bank the cash back offer will be available throughout the year.
The bank sources said the cash back offer can be availed at all restaurants, fast food joints, pubs, bars and movie theatres. On this card for the first three months the customers do not have to pay any interest. Also, on this card bank offers EMI facility. The purchases above Rs 5,000 can be converted into EMIs.
The bank sources said the cash back offer can be availed at all restaurants, fast food joints, pubs, bars and movie theatres. On this card for the first three months the customers do not have to pay any interest. Also, on this card bank offers EMI facility. The purchases above Rs 5,000 can be converted into EMIs.
Tuesday, February 9, 2010
Banks adopting safer option of open prepaid cards
Banks are shrinking their credit card segment to avert risks. In view of this banks are adopting the safer option to make profits, ‘open’ prepaid cards.
Through open prepaid cards banks will be able to offer payment services to people who are not using net banking, while enabling easy access for huge base of secure card users.
This concept has worked well for public sector banks and their foreign peers.
An anonymous senior Bank of India official said, “We are planning to launch open prepaid cards (that allow cash withdrawals). Things are in advanced stages of examination.”
Another official from Andhra Bank said, “We are also exploring the opportunity since we do not have a prepaid card now.”
Even Barclays and HSBC too, said they are also weighing options.
A senior foreign bank official told, “We want to issue a card to vendors, dealers, suppliers, etc who work with a company. But our parent requires us to do KYC (know your customer) verification for each individual who holds a prepaid card. That may not be feasible. So we are assessing.”
Piyush Khaitan, managing director of Venture Infotek, a technical service provider to plastic cards industry, told now most of the public sector banks are preferring to issue prepaid cards.
Khaitan added, “It is the best way to cover people who are not covered by the banking channel.”
According to the Reserve Bank of India (RBI) banks can issue only prepaid cards which can only be used for cash withdrawals.
But two private companies such as Itz Cash Cards (a unit of Zee, the company that owns 50% of Diligent Media Corporation, which publishes the DNA) and Done Cards, authorized by RBI, can issue semi-closed cards, using which various utility payments and other transactions can be done.
Single entity issue closed cards to its customers or vendors for payment to be made to the same entity.
Naveen Surya, managing director of Itz Cash Cards, said, “Banks offer forex, meal cards etc, but so far most have not come up with a general purpose prepaid card. The population covered by credit and debit cards is just 10%, of which credit is hardly 2%.”
The two public sector banks Central Bank and Punjab National Bank have already launched their gift cards, and these cards fall in the prepaid card category.
Central Bank is aiming to become a big player in the prepaid card market, while Punjab National Bank is planning to roll out its international travel card (prepaid variant), in which customer will get facility to load money in rupees and use it in select countries to pay in relevant currencies.
Last month, two international prepaid card industry bodies have made entry in India.
Tony Craddock, chief executive director of Global Prepaid Exchange, based in London, said, “Many US and UK-based companies are willing to enter the prepaid market in India. There is a whole lot of money waiting to enter in this sector.”
The UK-based ‘hiten’ cards is having discussion with programmers and the regulator to launch prepaid cards in India. “We have already done our feasibility test,” Jitendra Mistry, financial consultant of hiten Prepaid MasterCard, said.
As per Indian banking regulator non-banking companies cannot offer open cards while most of the international companies are looking forward to offer the same. Some of the existing players have a huge turnover which shows good opportunity in India.
Surya of Itz Cash said, “We had a turnover of Rs 2,000 crore in the last financial year and this year we are hoping to touch Rs 2,500 crore”.
George Paul, general manger (brand & ARB) retail, who heads the Petro-card and fleet operators pre-paid cards for Bharat Petroleum Corporation, told there are more than 2.6 million cards in the market thus company is seeing a turnover of Rs 10,000 crore. With another 1.7 million cards being used by fleet of truck drivers and transportation companies.
Event the chances of frauds in prepaid card are quite low as compared to credit and debit cards.
Paul said, “In the last 10 years of our history I haven’t heard of a fraudulent transaction”.
“In the last five years, I haven’t come across any instance of fraud. There may be one or two cases of theft, but no fraud,” Itz Card’s Surya said.
As per the information provided by officials, a person who tries to make fraudulent transaction will not get much incentive as the money involved is limited in each card.
Through open prepaid cards banks will be able to offer payment services to people who are not using net banking, while enabling easy access for huge base of secure card users.
This concept has worked well for public sector banks and their foreign peers.
An anonymous senior Bank of India official said, “We are planning to launch open prepaid cards (that allow cash withdrawals). Things are in advanced stages of examination.”
Another official from Andhra Bank said, “We are also exploring the opportunity since we do not have a prepaid card now.”
Even Barclays and HSBC too, said they are also weighing options.
A senior foreign bank official told, “We want to issue a card to vendors, dealers, suppliers, etc who work with a company. But our parent requires us to do KYC (know your customer) verification for each individual who holds a prepaid card. That may not be feasible. So we are assessing.”
Piyush Khaitan, managing director of Venture Infotek, a technical service provider to plastic cards industry, told now most of the public sector banks are preferring to issue prepaid cards.
Khaitan added, “It is the best way to cover people who are not covered by the banking channel.”
According to the Reserve Bank of India (RBI) banks can issue only prepaid cards which can only be used for cash withdrawals.
But two private companies such as Itz Cash Cards (a unit of Zee, the company that owns 50% of Diligent Media Corporation, which publishes the DNA) and Done Cards, authorized by RBI, can issue semi-closed cards, using which various utility payments and other transactions can be done.
Single entity issue closed cards to its customers or vendors for payment to be made to the same entity.
Naveen Surya, managing director of Itz Cash Cards, said, “Banks offer forex, meal cards etc, but so far most have not come up with a general purpose prepaid card. The population covered by credit and debit cards is just 10%, of which credit is hardly 2%.”
The two public sector banks Central Bank and Punjab National Bank have already launched their gift cards, and these cards fall in the prepaid card category.
Central Bank is aiming to become a big player in the prepaid card market, while Punjab National Bank is planning to roll out its international travel card (prepaid variant), in which customer will get facility to load money in rupees and use it in select countries to pay in relevant currencies.
Last month, two international prepaid card industry bodies have made entry in India.
Tony Craddock, chief executive director of Global Prepaid Exchange, based in London, said, “Many US and UK-based companies are willing to enter the prepaid market in India. There is a whole lot of money waiting to enter in this sector.”
The UK-based ‘hiten’ cards is having discussion with programmers and the regulator to launch prepaid cards in India. “We have already done our feasibility test,” Jitendra Mistry, financial consultant of hiten Prepaid MasterCard, said.
As per Indian banking regulator non-banking companies cannot offer open cards while most of the international companies are looking forward to offer the same. Some of the existing players have a huge turnover which shows good opportunity in India.
Surya of Itz Cash said, “We had a turnover of Rs 2,000 crore in the last financial year and this year we are hoping to touch Rs 2,500 crore”.
George Paul, general manger (brand & ARB) retail, who heads the Petro-card and fleet operators pre-paid cards for Bharat Petroleum Corporation, told there are more than 2.6 million cards in the market thus company is seeing a turnover of Rs 10,000 crore. With another 1.7 million cards being used by fleet of truck drivers and transportation companies.
Event the chances of frauds in prepaid card are quite low as compared to credit and debit cards.
Paul said, “In the last 10 years of our history I haven’t heard of a fraudulent transaction”.
“In the last five years, I haven’t come across any instance of fraud. There may be one or two cases of theft, but no fraud,” Itz Card’s Surya said.
As per the information provided by officials, a person who tries to make fraudulent transaction will not get much incentive as the money involved is limited in each card.
By March end 20.35 lakh credit cards to be flushed out of the system
Venture Infotek, India’s leading payment solutions provider in its report has stated that by March-end around 20.35 lakh credit cards will be flushed out of the system. According to the report titled ‘Payment Card Industry 2009’ there has been a sharp decline in the card count to 226.64 lakh cards by March-end, as against 246.99 lakh cards as on March 2009.
In contrast, as per the study banks will be increasing their debit card count by 358.44 lakh cards by end of the year with 1,732.75 lakh debit cards.
ICICI Bank is leading the bandwagon by reducing its credit card count close to 15 lakh credit cards by the end of the financial year to 55 lakh cards from 70 lakh as on March 2009.
According to the annual report other leading banks are also reducing their credit card counts. State Bank of India aims to reduce its credit card count from 27 lakh to 25 lakh, Citibank will be reducing it from 25 lakh to 18 lakh. The other foreign bank ABN AMRO will be reducing its card count from 13.05 lakh to 10 lakh and Standard Chartered will be reducing it from 13 lakh to 11 lakh by the end of present financial year.
Abizer Diwanji, an executive director (banking) with KPMG said, “Banks have realized that it is not easy to run a credit card business in this country as losses for some of the leading players had peaked to almost 30-35 per cent in the past. Hence, most banks are reducing their credit card exposure.”
Overall a sharp drop in the total number of credit cards is being observed but some banks such as HDFC Bank, HSBC, Barclays, Axis Bank and Canara Bank are getting aggressive about increasing their credit card portfolios. According to the report, around 9.77 lakh cards will be added by these five banks.
However, all banks have seen increase in their debit card portfolios. The report stated, “The industry is expected to add around 358.44 lakh debit cards by the end of the present financial year.” Amongst the major banks SBI, ICICI Bank, Axis Bank, HDFC Bank and Punjab National Bank are going to see major increase in their debit card portfolios.
The head of cards working with a leading private bank said, the increase in debit cards is mainly due to rise in the number of new accounts.
To increase their transaction banking business, Indian banks are aggressively setting up ATMs in the country. As per the survey report, by the end of March 2010, the 39 banks together are expected to increase ATM counts in the country to 58,850.
The report says, “ATMs are expected to grow by 35 per cent during 2009-10 while SBI alone is expected to add close to 9,000 ATMs.”
In contrast, as per the study banks will be increasing their debit card count by 358.44 lakh cards by end of the year with 1,732.75 lakh debit cards.
ICICI Bank is leading the bandwagon by reducing its credit card count close to 15 lakh credit cards by the end of the financial year to 55 lakh cards from 70 lakh as on March 2009.
According to the annual report other leading banks are also reducing their credit card counts. State Bank of India aims to reduce its credit card count from 27 lakh to 25 lakh, Citibank will be reducing it from 25 lakh to 18 lakh. The other foreign bank ABN AMRO will be reducing its card count from 13.05 lakh to 10 lakh and Standard Chartered will be reducing it from 13 lakh to 11 lakh by the end of present financial year.
Abizer Diwanji, an executive director (banking) with KPMG said, “Banks have realized that it is not easy to run a credit card business in this country as losses for some of the leading players had peaked to almost 30-35 per cent in the past. Hence, most banks are reducing their credit card exposure.”
Overall a sharp drop in the total number of credit cards is being observed but some banks such as HDFC Bank, HSBC, Barclays, Axis Bank and Canara Bank are getting aggressive about increasing their credit card portfolios. According to the report, around 9.77 lakh cards will be added by these five banks.
However, all banks have seen increase in their debit card portfolios. The report stated, “The industry is expected to add around 358.44 lakh debit cards by the end of the present financial year.” Amongst the major banks SBI, ICICI Bank, Axis Bank, HDFC Bank and Punjab National Bank are going to see major increase in their debit card portfolios.
The head of cards working with a leading private bank said, the increase in debit cards is mainly due to rise in the number of new accounts.
To increase their transaction banking business, Indian banks are aggressively setting up ATMs in the country. As per the survey report, by the end of March 2010, the 39 banks together are expected to increase ATM counts in the country to 58,850.
The report says, “ATMs are expected to grow by 35 per cent during 2009-10 while SBI alone is expected to add close to 9,000 ATMs.”
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