Search:



The Web

Rediff








 Latest Business news on mobile: sms BIZ to 7333

Home > Business > Business Headline > Report


Apex bank frowns on plastic party

BS Banking Bureau in New Delhi | December 25, 2004 16:32 IST

After the home loan overdrive, it is the credit card hardsell that has come up for the Reserve Bank of India's scrutiny.

At a high-level meeting with bankers on Friday, the central bank cracked the whip on banks for issuing credit cards indiscriminately and for the rising number of complaints from customers against card- issuing banks.

The RBI has decided that the Indian Banks Association, the premier bankers' body, along with some large card-issuing banks, will evolve a code of conduct. Friday's meeting was attended by retail heads of leading commercial banks.

An RBI statement said it has been receiving large number of complaints of harassment, of offering of unsolicited cards, of wrong activation of cards and lack of transparency in service charges.

The RBI feels that banks should develop an internal credit-rating model for its credit card customers. The high interest rates charged by banks is also a worry, an IBA official said.

Concerned with the aggressive growth in the banks' retail lending, the RBI had in its October credit policy increased the risk weight from 50 to 75 per cent for housing loans and from 100 to 125 per cent for consumer credit, including personal loans and credit cards.

Private banks have reported a phenomenal growth in the credit card market with card issuance vaulting by 117 per cent and the card base rising from 1.26 million to 2.73 million.

Foreign banks followed with a 25 per cent increase in the base, rising from 4.32 million to 5.4 million. The public sector banks have shown the least growth of 10 per cent, rising from 2.02 million to 2.22 million cards. These numbers are mentioned at Venture Infotek's fourth industry survey 2004.

Foreign banks account for about 53 per cent of the credit card industry in India. In the private sector, ICICI Bank and HDFC Bank are the two prominent players, who together hold 26 per cent of the market. Public sector banks account for 21 per cent with the State Bank of India leading the pack.

In addition to the IBA panel, the RBI has also constituted a working group to draft a mechanism for to address various issues relating to regulatory requirements for credit cards.

The working group would look into various aspects relating to customer protection and suggest measures for usage of credit cards in a safe, secure and customer-friendly manner.

7333: The Latest News on Your Mobile!

Powered by

Share your comments


 What do you think about the story?




Read what others have to say:


Number of User Comments: 2




Sub: Credit Card - A financial Trap

Credit card is one of most misleading financial trap in the society which charges nearly 60% Interest per annum once you fall prey to the ...


Posted by Pradeep Nair





Sub: RBI frowns on plastic money

Its a good step by RBI. Credit card companies offer cards free for the first year. Then they send bill for the second year 'renewal' ...


Posted by MP Jain




Disclaimer




Article Tools
Email this article
Top emailed links
Print this article
Write us a letter
Discuss this article



Related Stories


Is a cash back credit card good?

Credit card spend? Citibank tops

HDFC rolls out global debit card



People Who Read This Also Read


Why Mukesh gave up sweat equity

Banks in consolidation mode

No danger to MAPS







Copyright © 2005 rediff.com India Limited. All Rights Reserved.