Wednesday, April 30, 2008

Mumbai police apprehended 8, credit card fraud unearthed

Mumbai police nabbed eight people of credit card fraud racket. The police arrested the accused on a tip-off from an HSBC Bank official. The arrested have been identified as Sameer Dave (26), Sudhir Naikare (27), Mahesh Sharma (39), Gangesh Pathak (21), Anand Mishra (26) and Harsh Badgujar (24). Following their interrogation, the police on Monday arrested two others — identified as Bhayandar residents Harshal Kapadia and Harshid Parekh. The accused have been remanded to police custody till May 5

The Oshiwara police told Nayan Chandrakant Bhagdev (34), a manager with the HSBC Bank at Malad informed them that he had come across a variety of dubious credit card transactions in shopping centers at malls in the Oshiwara Lokhandwala area. The manager also told the police that he had got information that a gang of fraudsters is possessing fake credit cards and would be visiting the Kamdhenu Shopping Centre at Lokhandwala on April 26.

Inspector Datta Sankhe of the Oshiwara police station said, “Acting on the information, a team of police officers laid a trap near the place. At the place, our officers saw an Indica car with six men inside approaching. Out of the six, two men got down and were given two credit cards by the others in the car. They were signaled to enter the shopping centre. Finding their movements suspicious, the officers who had laid the trap arrested them.”

The police took in custody from the accused a laptop with pen drive, other computer accessories, 14 fake credit cards, 2 fake driving licenses, fake RTO stamps, fake PAN cards and a Chinese-make scanner used for transferring credit card data, Sankhe said.

“On their interrogation, we found that these men were running a major credit card fraud. One of them, Delhi-based Anand Mishra, is a computer engineer. They had a Chinese-make electronic device which could be used for transferring data from a credit card to it. Their modus operandi was to steal credit cards, use the machine to transfer the data from the stolen cards and then re-transfer the entire data to a non-operational credit card in their possession. After transferring the data, the cards can be used for making purchases at various shopping centers. Till date, they have allegedly done shopping of goods worth more than a lakh. The police also seized fake licenses and PAN cards from the accused. We still do not know the full extent of the racket they were running. Further investigation is on,” added Sankhe.

Monday, April 28, 2008

Be aware of RBI rules made for credit card companies

The Reserve Bank of India (RBI) has made rules for credit card companies operating in India but people of India are not aware of these official rules. There have been instances where people owing credit cards are being have often suffered at the hands of the card issuing banks.
Gita purchased an airline ticket by using her credit card online. A month later, she received billing statement on seeing the details she was shocked to see her statement included a charge for clothes worth Rs 2,000. As she had not bought the clothes, she thought that the credit card company might have made a mistake. On carrying out the investigations it was discovered that a hacker had gained access to her credit card number online and made the purchase. She is not the only one to experience this. Every year, there are several customers facing such problems and are involved in disputes with credit card companies.

In fact promotional offers by credit card companies are also creating problems for the people. For instance Sita, received a call from a credit card company that said she will be able to get cosmetics worth upto Rs 2,000 free in the first month if she signed up for the credit card. But when she received her billing statement she was shocked to see the charges for cosmetics worth Rs 500 which she had purchase from her local store.

Innumerable customers such as Sita and Gita often suffer in silence because of their unawareness about the rules formulated for credit card companies.

Basically the Reserve Bank of India (RBI) master circular of rules were planned for Indian credit card companies which has information for credit card users in India which they should keep in mind while using their cards:

1) Each credit card issuing institution is required to incorporate the RBI's rules in its fair practices code and release that information to everybody, including customers

2) The card issuing companies must inform the customers about the terms and conditions for issue and usage of a credit card. The customers should also ask for such information in printed form (leaflets, booklets)

3) All the information related to annualized percentage rate (APR), the minimum amount due, and the date within which payment has to be made (at least a fortnight must be allowed) should be provided to the customers clearly.

4) Banks should take care that wrong bills are not issued to the customers. In case of any dispute the bank should be ready to give documentary evidence within 60 days

5) Customers' rights must be protected by the credit card company. The right to privacy is among these rights. Customers should not be issued unwanted cards. The permission from the customer should be taken in case of change in the terms and conditions and also must be informed about the changes also. If customers want their telephone number included in a Do Not Call Registry, the credit card company should honor the request

6) The bank should ensure the confidentiality of customer information even if its operations are being outsourced. The bank must take consent from customer's consent before releasing any details related to customer.

7) The customer must be informed if he/she is being reported to the Credit Information Bureau of India Ltd or any other credit information company approved by RBI for defaulting on payments

8) Threats or harassment of any kind in debt collection is prohibited

9) Every credit card company is required to have a grievance redressal officer to address complaints made by customers. In case a complaint is not addressed within 30 days, a customer can take his/her complaint to the Banking Ombudsman

10) The RBI has the right to penalize a credit card company for violating its rules.

Top-ranking executive credit card misused

A top-ranking executive with a construction major, Sandip Bose has owned a Cititbank credit card for last two years and had not used his credit card since then yet on April 17 he received a message on his mobile a few days back to settle a due amount of Rs 65000 for transaction made on his credit card.

After reading the message Bose was left stun because he had not used his credit card for the last. He immediately lodged a complaint at both Jadavpur police station and the criminal investigation department office.

Bose also called up the credit card’s customer care centre and sought information about the transaction details.

The detailed statement provided by the bank showed all the transactions — mostly online — were made from March 21-27. In those seven days, Air Deccan tickets were purchased online and several imported items have also been purchased.

On seeing the details of purchase in the statement Bose understood that he had been duped so he called up the bank and asked them to stop all transactions made on the card. The bank followed the instructions and also started an internal probe to find out how the card was used.

Bose informed that he had not used the card in the last two years. Also, he had not given it to anyone. Even the there was no report of the card getting lost.

CID is doing investigation and is waiting for the transaction details from the bank. Police said several such cases have come into lime light.

"If one has access to personal details of cardholders, then he or she can get hold of both the card number and the CVV number. It could be possible that the card numbers were given by someone from the bank itself. The cyber crime section is dealing with the case," said a senior CID officer.

Monday, April 21, 2008

Increase of defaulters slows down credit card business growth

Recently there has been increase in the number of defaulters due to which banks have been forced to tighten due-diligence procedures therefore the credit card business is facing slowdown.

According to the RBI data the growth in new credit card accounts has gone low by 18 per cent in the just concluded fiscal (until February), as compared to 33 per cent in 2006-07. At present the total card base in the country is around at 26 million.

Mr Tarun Bhatia, Head-Financial Sector ratings, CRISIL said, “While earlier, banks would extend loans to customers with a minimum annual income of Rs 80,000, they have now increased this to a minimum of Rs 1.2 lakh. Banks are also asking for the PAN card and strictly following other ‘Know Your Customer’ procedures before giving credit cards”.

ICICI Bank has been the largest credit card provider in the country issued around 9 million credit cards. Past three years the growth of the credit card accounts of the ICICI banks has come down to around 20-22 per cent lower than the average growth of 40 per cent.

“The overall slowdown in retail loans has also rubbed off on the credit card segment,” said Mr Sachin Khandelwal, Head-Cards Product Group, ICICI Bank.

According to Mr Parag Rao, Senior Vice-President, Head-Product and Portfolio Management, Credit Cards, HDFC Bank the interest rates on various segments in the retail asset portfolio have steadily gone up and, so, the outflow in terms of an EMI (equated monthly installments) has also gone up. He said, “This has put pressure on individual customers which in turn has increased the default rates in the industry,”

Bankers allege in view of high rates of delinquency they are becoming more cautious about lending in these segments.

According to industry analysis the default rates on credit cards have gone up by almost 150-200 basis points this year as compared to 11-12 per cent in 2007-08, against 9-10 per cent in 2006-07.

“The new issuance of cards has seen a slowdown because of credit losses,” said Mr Neeraj Swaroop, Regional Chief Executive, India and South Asia, Standard Chartered Bank.

Standard Chartered Bank has not been hostile about increasing the number of cards issued but instead is focusing on increasing spends on each existing card.

“Customers are highly over-leveraged and are given loans 20-30 times of their annual income. Banks are not making good use of credit bureau data,” said a senior official at a foreign bank.

Credit data bureau analysis’s points out that banks which are stressing more on their vigorous expansion program are trying to reach out to customers by either offering them a credit card or a personal loan.

“Defaults have started spiraling because banks have gone into Tier II and Tier III towns as well as the lower-income segments. The average cards per user have also increased,” said Mr Bhatia.

Saturday, April 19, 2008

TimesofMoney in a tie-up launched first entertainment credit card

Timesofmoney, a Times Group company, launched India’s first entertainment co-branded credit card in a joint venture with Barclays bank The ‘Times Card’ has been envisioned to be an aspirational credit card for high spenders. The card has been packaged to meet lifestyle fancies and offer its members numerous exciting opportunities to redefine their lifestyle across entertainment, dining, shopping, travel, body and beauty.

Times Card also have offers of privileged invitations to high profile Times events such as the Femina Miss India, Filmfare Awards, blockbuster movie premieres, live concerts and celebrity parties. The statement issued by the company said, “With the growing Indian economy, there has been a considerable growth in lifestyle and the luxury spends from today’s high-end spenders. Times Card is weaved along the 5Cs of convenience, comfort, care, cohesive and comprehensive. The spending patterns of Indian consumers have changed, while the ‘regular spends’ are growing considerably, their ‘lifestyle spends’ are expanding rapidly”.

Speaking at the launch ceremony, Times Group MD Vineet Jain said, “This strategic partnership with Barclays, one of the world’s largest credit card issuers, gives us the perfect platform to create a new benchmark in the credit card industry. Times Card gives us an opportunity to add value to our relationship with our customers by expanding our service offerings to them.”

TimesofMoney president Avijit Nanda, claimed that this card will endeavor to go beyond what’s expected from a credit card and introduce a whole new world of entertainment.

Barclays GRCB MD (India and Indian Ocean) Samir Bhatia said, “Times Group, with its experience and leadership in the entertainment space, is the perfect partner to create a great customer offering. This unique card goes with our philosophy of transparency and simplicity of use. It gives customers the power to control their finances and choose their rewards.”

At present, TimesofMoney in India is providing services in the segments like money transfers, global money transfers, NRI services, co-branded cards and is a pioneer in online payments. Besides this its transaction business, TimesofMoney is providing a single-window online channel for non-residents which has helped it in building up a strong and loyal customer base.

Wednesday, April 16, 2008

Kotak Mahindra Bank launched range of credit cards

Kotak Mahindra Bank private sector lender aiming to be in the list of the top five credit card issuers in domestic market in next three years launched its suite of Simple and Powerful Credit Cards for its customers. Kotak Credit Cards is the latest addition to the wide range of financial services offerings of Kotak Group.

Speaking on the occasion of the launch Kotak Mahindra Bank’s Executive Vice Chairman and Managing Director Uday Kotak said, “The launch of the credit card business is the next big step in the Kotak goal to provide a holistic suite of financial products that caters to every possible need of our customer”.

He told the reporters in the next three years bank has plans to issue 15 lakh credit cards and will target aspirational Indians, salaried and self-employed youths by demystifying credit on card, by offering innovative credit solutions.

"With this launch, the bank is now offering full range of financial services to customers. We expect to disburse 15 lakh cards in the next three years and thus to become one among the five largest credit card issuers in the country," Kotak said.

Kotak’s card range launched includes 2 Visa Gold Cards- Trump and Fortune, League Visa Platinum Card and Royale Visa Signature Card. Kotak cards has also taken a fresh approach on card design, and has introduced India’s 1st vertical card.

Kotak Card Highlights:

First-of-its kind benefits to Indian credit card customers -

o 1st ever vertical card design in India

o Simplified fees and charges

o No interest, no fee EMIs for three months

o 10% cashback on dining, movies round the year

o Interest-free cash withdrawals

o Auto-encashment of reward points

Kotak said the gold cards are available free of cost while the other two variants require a one time fee. Adding to this he said the bank has also introduced a no-charge, three months EMI facility on credit cards, where customers do not have to pay any processing fee.

He said, "The Trump Visa Gold card will enable customers to receive 10 per cent cash back round the year for expenses in restaurants and movies while Platinum and Signature cards ensure auto-encashment of reward points earned".

The product suite:

Trump Visa Gold Card – A free-for-life card with first-time 10% cash back round-the-year across all restaurants and movie halls

Fortune Visa Gold Card - A free-for-life card, with up to 48 days interest-free cash withdrawals for a transaction fee of just Rs. 199

League Visa Platinum Card – With a one-time fee, the card offers auto-encashment of reward points earned, concierge and insurance services, Golf Fee Card for exclusive access to golf courses, Priority Pass for access to international airport VIP lounges and a host of other benefits through tie-ups with partners like Taj and Kaya

Royale Visa Signature Card - With a one-time fee, the card offers auto-encashment of reward points earned, concierge and insurance services, Golf Fee Card for exclusive access to golf courses, Priority Pass for access to international airport VIP lounges and a host of other benefits through tie-ups with partners like Taj and Kaya

Mr. Subrat Pani, Business Head – Cards, Kotak Mahindra Bank said even though being a late competitor into the fast-growing credit card segment, the bank is confident to place itself among the top five credit-card issuers in a time-span of three years.

He added, “I am confident that Kotak Credit Cards will make a difference amongst Indian customers with its segmented approach to offering credit solutions. While on one hand, Indian customers are increasingly exploring better lifestyles through credit, on the other hand there is a constant apprehension on the charge structure. This has restricted usage of credit cards to just a payment tool. We as the credit cards industry have to do a lot more to make it easier for customers to understand and use credit cards. I am convinced that by keeping it Simple, Kotak Cards will transcend this and become a smart credit solution for the Indian consumer.”

Kotak Mahindra Bank new aspirant into the country's banking sector has 178 branches across 107 locations in the country.

Wednesday, April 9, 2008

Banks covered large section of farmers under Kisan Credit Card scheme

The Kisan Credit Card (KCC) scheme, introduced in 1998, has received overwhelming response from the farmers as well as the banks. The Centre has entrusted Nabard the responsibility of ensuring proper implementation of the scheme and timely monitoring.

According to the figures available the banking sector, including regional rural banks and cooperative banks, has issued 628,392 kisan credit cards (KCC) with a credit limit of Rs 3,272.08 crore in Karnataka during the first nine months of 2007-08.

All the eligible card holders have been covered under personal accident insurance scheme.

As per the data collected by Syndicate Bank, the conveyor of state level bankers committee (SLBC), during the year commercial banks have issued 235,988 cards with a credit limit of Rs 1,667.24 crore, while regional rural banks have issued 144,388 cards with credit limit of Rs 996.68 crore in the state. While the co-operative banks issued 247,016 cards with Rs 608.16 crore credit limit.

According to Nabard, the monitoring committee there is still enough scope for expanding the scheme to many more areas of the state as many farmers have been left out uncovered under this scheme. Especially, farmers living in the backward districts like Bidar, Gulbarga, Raichur, Chitradurga and Davanagere are yet to be brought under the KCC scheme.

As per the guidelines received from the Centre, Nabard had issued instructions to cooperatives and RRBs to work hard and collect data of the farmers not covered under the KCC scheme, to bring into fold.

In addition to this emphasis has been made to cover more women under the scheme so that they can have more access to credit. Nabard has also instructed all the banks to cover small farmers also evaluate the progress regarding issuance of KCCs with specific reference to coverage of women, small and marginal farmers in the above backward districts.

Tuesday, April 1, 2008

ICRA to rate lending’s of State Bank of Indore

A Memorandum of Understanding (MoU) was signed between Credit rating agency ICRA and the SBI associate bank State Bank of Indore. The agency will rate the loans and other exposures of State Bank of Indore under the Reserve Bank’s Basel II norms.

According to a press release of the bank the rating agency has signed a (MoU) with State Bank of Indore to rate the bank's lending’s under the new capital adequacy norms set by RBI.

The agency said it will rate the lending’s under its 'Line of Credit' rating service.

The RBI under the Basel II norms has given some regulatory guidelines under which a bank's exposures have to be rated to keep a check on the banking system.

As per the MoU under the RBI guidelines the bank, with the help of the rating service, will assign the risk weights applicable to its borrowers.

It added, "The risk weights would be linked to the various rating categories and would be as per RBI's Basel II guidelines".