Professional Documents
Culture Documents
No 11)
A credit bureau is a repository of credit information of all customers
of its members, which comprises banks and financial institutions.
CIBIL (Credit Information Bureau of India Limited) is one such
organization that collates credit information contributed by its
members and disseminates it to lenders, helping them in their credit-
decision-making and lending process. CIBIL houses only credit
information i.e. information on loans and credit cards. It does not
have any details of customers’ savings accounts or fixed deposit
accounts. Members share this credit information of their customers
with CIBIL month on month so that CIBIL’s database is updated. This
information is then used by credit underwriters to make effective
credit decisions.
Therefore, with proper financial planning and by maintaining a good
track record of repayment of dues for loans / credit cards, you will be
able to build a good credit history for yourself. This, in turn, may help
you in getting future loans / credit cards easily or on better terms.
Penetration
Credit card in circulation (in millions)
30
25
24.38
22.6
20
17.5
15
Credit card in circulation (in millions)
13.1
10 10
7.1
5
Source: Link
Around 27 Million consumers spent Rs. 580 Billion through
credit cards in FY 2008.
Data released by the Reserve Bank of India (RBI) showed the
number of cards fell by 332,000 in April,2009 to 24.38 million.
On a year-on-year basis, the card population fell by 5% or 1.36
million between February 2008 and 2009. Meanwhile the
credit card base also shrank by 359,000 in February,2009.
Interestingly, even among the rich, credit card ownership in
India is the lowest in the world. While 90% of the affluent in
Hong Kong have credit cards and the corresponding figure for
Sydney stands at 87%, in India, only 28% of the affluent have
credit card.
Source: Link
Caveats
A study stated that there are a high number of inactive
cards among the Indian issuers. There were only 56%
active cards in India as compared to 80% and 75% in
Australia and Singapore respectively.
In many cases, people holds more than 1 credit card at
a time.
No bank openly talks about its credit card numbers and
figures of non-performing assets, or NPAs, but analysts
peg the NPA average in the credit card business at
around 10%.
Personal consumption through credit cards in India is one of
the world’s lowest, at about 1% of total spending, against
global average of 8.6%, Asia Pacific’s 6% and China’s 3%.
Which means that out of every Rs.100 spend only Re.1 is via
credit card.
Banks issued credit cards free of joining fee and annual fee
without looking into customers credit history.
Multiple cards lead to some problems for customers like
losing track of the different bills each month and hence
falling behind on payments; sometimes the temptation of
high credit limits entice customers to overspend. Which may
lead to defaulting in payments and ultimately bad debts.
Banks cannot make money on their credit card business, why?
Source: Link
The number of debit cards issued by banks
grew at a CAGR of more than 43% from FY
2006 to FY 2008.
There were over 102 Million consumers with
slight more than Rs. 125 Billion debit card
spending during FY 2008.
Your inputs on this topic will be appreciated.