Friday, May 30, 2008
ICICI Bank largest private sector bank has started charging Rs 100 from its card holders for making credit card payments in cash at ICICI Bank branches, starting June 1, 2008. Standard Chartered Bank since March 2006 is already charging Rs 99 from its customers.
Here the question rises why pay charges to even pay your bank the due cash? The reason bankers give is that they are trying to reduce the burden on short-staffed branches.
Sachin Khandelwal, head of the cards group at ICICI Bank, said, "We are discouraging our customers from depositing cash as there is a transaction cost.
About Rs 100 is what is typically charged and it's not specific to cards. It's a cash deposit charge."
He advises the customers to avoid the charge card holders should drop their cheques in a drop-box or do an ECS (electronic clearing service) or auto debit to pay their credit card dues.
R L Prasad, general manager, credit cards and personal loans, Standard Chartered Bank, says that allowing payments to be made at branch counters is an added facility that the bank provides therefore it is charged. He added "This is a service charge for providing teller facility for making cash payments. Customers are informed of this and all other charges at the time of applying for the card through the most important document (MID)".
Also, the details of the charges are printed on back of the statement.
Dropping a cheque in a drop-box a couple of days before the due date is not a reliable solution as processing of cheque takes about three days to clear if one stays outside the national capital region of Delhi.
"We recognize that cheques take a day or two to clear and hence we encourage our customers to make their payments three days in advance though the cheque may be dated as per the payment due date," said Prasad of Standard Chartered Bank.
As for ECS payments — where a card holder authorizes his bank to pay whatever is billed on his — is also not safe, if a huge, unwarranted amount gets billed for whatever reason, bank balance will automatically get debited.
Thus there is a new payment option is to deposit cash at ATMS. According to Citibank "A PIN-less deposit facility has been launched for the benefit of cards customers at all our ATMs. A customer carrying his/her credit card can use this option for payment".
While other banks with strong credit card portfolios, such as HSBC Bank, ABN Amro Bank, SBI, Kotak Mahindra Bank and Citibank have denied for charging card holders for making cash payment at branches. Answers from HDFC Bank are still awaited.
But there are chances of other banks following the suit. The reason is that most of the banks have started penalizing customers for using branches and give incentives for using alternate channels such as ATMs and online payments.
For example, demand draft requests at branches can cost you Rs 75, but if you use phone banking mode, then you have to shell out only Rs 50.
A stop-payment order would cost you Rs 50 per cheque (Rs 100 per mandate) if asked for at a branch. But, if one uses the phone banking channel, then HDFC Bank charges only Rs 40 per cheque (Rs 80 per mandate). Though ICICI Bank doesn't offer any cut for stop-payment via phone banking, but it is free if one uses the internet banking mode.
However some banks see a disadvantage in trying to push customers away from branches by charging them for doing payments at desk. Sanjay Sharma, IT advisor at IDBI Bank says, "When banks promote electronic payments and transactions, they must also keep in mind that they are missing an opportunity to cross-sell products."
True, if there are no customers at branches, then to whom banks will sell insurance, mutual funds, and other products that help them earn commissions?
Thursday, May 29, 2008
A survey was carried out by American Express, quoting a consulting firm Accenture according to its report companies can bring down their travel and entertainment expenses by 9% through effective use of corporate card data.
According to the survey data available the usage of corporate cards have gone up considerably in the country from 33% of companies in 2001 to 79% in 2007 — because of increased benefits being offered by the issuing banks.
Survey report suggests that companies can manipulate in a better way to cut costs if employees spend through corporate cards. As per survey, usage of corporate cards will help companies control the combined spend of their employees in travel and entertainment activities to negotiate better discounts with suppliers.
Prashant Aggarwal, head of American Express consultancy (Japan and Asia-Pacific) pointed out that high levels of travel and entertainment expenses is somewhat a new phenomenon in India and yet firms have to fully exploit the economies of scale through consolidated bargaining with key suppliers like hotel chains, airlines and taxi services.
Issuing banks give high discounts to a big regular customer. In case employees use multiple payment methods like cash and personal cards limits a firm’s ability to bargain for its combined consumption during a year.
However when all the employees of a company use corporate card for their travel and entertainment expenses, their spending behaviors are processed centrally and provide the companies information about their annual spends under different heads. This kind of information helps a company to bargain with service providers for discounted price.
According to survey report now companies have started switching to more usage of corporate card as they have understood the power of using the card and they are even formalizing a travel policy.
Friday, May 23, 2008
Senior Bankers informed that on regular basis banks submit information on frauds to the Reserve Bank of India (RBI), but now they will be sharing information among themselves which will in turn help them to be alert and protect them from being duped by fraudsters, said senior bankers.
IBA has currently decided to launch the project on a pilot basis. Cibil and Trans Union in cooperation with 10 banks are expected to execute the project in three phases.
An IBA official informed that after evaluating the feedback from the pilot project, the provisional plan will be drafted to run the project for the banking industry from the next year.
In the first phase of the project database will be formulated according to the format approved by banks and the time period for the data collection can be over six months.
Thursday, May 22, 2008
DEAL IS ON
· On September 6, 2007, LIC (40 per cent) had announced an MoU with GE Money India (35 per cent), Corporation Bank (5 per cent), LIC Housing Finance (4 per cent) and LIC Mutual Fund AMC (2 per cent) to create a new credit card company
· GE Money has a tie-up with State Bank of India and SBI Cards, their joint venture, is the second largest card company
· SBI was not too happy with the way the company was being run and had incurred losses of around Rs 150 crore last year
Hemant Bhargava, CEO, LIC Credit Cards Company said, "The initial MoU period is over, but the project is on. In one or two weeks, we may soon announce the launch of some aspects related to the credit cards company."
A senior LIC executive in an interview to Business Standard said there are some issues that are being thrashed out. "Till GE Money does not tell us that this venture is off, it is on."
When GE Money spokesperson was contacted, said, "Strategic partnerships have been a key pillar of GE Money's growth globally and in line with this strategy, partnerships will continue to be critical to our growth in India. GE Money continues to work closely with LIC to finalize its proposed joint venture and to ensure the future success of this partnership."
Meanwhile GE Money is having a tie-up with State Bank of India and SBI Cards, their joint venture, is the second largest card company. Whereas SBI was not too happy with the way the company was being run as it had incurred losses of around Rs 150 crore last year, executives of the country's largest bank were also irked at GE Money's decision to tie up with LIC.
But SBI and GE Money have put their differences aside for the betterment and have decided to extend their partnership. This has given rise to the theory that GE Money and LIC might put their deal on the backburner.
On September 6, 2007, LIC having 40% stake had announced a MoU with GE Money India with 35%, Corporation Bank with 5%, LIC Housing Finance with 4% and LIC Mutual Fund AMC with share of 2% to create a new credit card company that was to influence the strengths of each company.
Besides this the remaining 14 per cent stake is to be offered to financial investors. The parties had planned to finalize definitive agreements by the end of October 2007. The MoU was valid for 90 days.
However the officials of LIC and GE Money said in spite of the expiry of the MoU, they had held talks to ensure that the proposed credit card company is realized.
Tuesday, May 20, 2008
Sachin Khandelwal, head - cards product group, at ICICI Bank pointed out, “The number of people who revolve payment is about half the customers in India for the industry. In terms of customer numbers it is about 35-40%” He said, “But that would be half the book value or even 50-65% for some banks.”
ICICI Bank till now has issued about 9 million cards since 2000; however Khandelwal declined to put a number to the people who revolve credit at ICICI Bank. But, he told DNA Money, “We are on the higher side.”
Mostly people who revolve credit pay just the minimum amount asked by the card company before the due date and agree to pay the remaining dues at a later date. The issuing bank charges interest on the overdue amount.
According to analysts there is nothing wrong in high revolving rate of credit cards. In fact, they say such an indicator is a sign of a maturity of the market.
Tarun Bhatia, head corporate and government ratings, Crisil pointed out that a higher revolving rate means customers are using the credit card as a loan product. He added in developed markets the revolving rates for credit cards are higher than 80%.
“The revolving rate in terms of value was about 30-35% a few years ago. It has now gone up to 50-60%, but that is not a concern, the concern will only be when people who are revolving don’t really have the credit worthiness to repay their loan,” he said.
Bhatia says the revolving rate might decrease marginally as banks tighten their lending norms to focus on better quality and high income customers.
ICICI bank has introduced several options so that they can keep a check on such cardholders who revolve. The options include equated monthly installment (EMI) option or conversion to a personal loan for people who cannot clear the entire outstanding in a month.
“Suppose you have spent Rs 70,000 when your disposable income is Rs 30,000. Then you start revolving at a very high rate of 3-3.35% and the charge keeps adding up. So you can call up and convert the transaction into installments,” Khandelwal said.
If ICICI Bank get in a tie-up with the merchant who sell goods, customers can get an interest rate of 0-12%.
“Otherwise we price the EMIs at 18%.” Khandelwal said. “We encourage EMI, as they are convenient for customers against the credit card charge are 36%,” he said.
“We have also brought it (the EMI facility) to merchants. Instead of calling customer care you can swipe the card and convert the payments into EMIs at the swipe itself. You tell the merchant that I want the 6 or 9 or 10 installment option,” he said.
As an offshoot of the same, the bank has launched an EMI card. “We launched the card in 2006 and have been pushing it for one year,” Khandelwal said.
Under the card, one gets the option to choose between Rs 1,000-4,000 of payment per month, which draws a limit. For instance you choose the 2,000 or a 4,000 card and you buy a refrigerator and you start paying installments. Later on you buy a TV, this amount will be added in to your basket, and however your tenure will change.
The credit card head clarified that they make sure that the customers do not get carried away.
The other option ICICI bank has for its customers is to convert the outstanding amount to personal loans. Khandelwal said, “Sometimes you don’t want to pay Rs 75,000 in one shot, you are not able to. So if you can, do it in 2-4 installments. Beyond that amount convert it to a personal loan.”
He expects positive response to the installment story on the travel and consumer durables segment. Most of the ICICI Bank’s credit cardholders today spend on travel and hotels put together. “This has really grown in the last two years. Airline tickets and domestic and overseas holidays are the largest, fuel is the third largest spend, followed by jewellery, retail garments and retail outlets,” he said.
ICICI Bank has done away with the post dated cheque model for consumer durable loans, in favor of the “cost effective and quicker” credit card model this March.
“We have realized that in the consumer durable business, only one-seventh or one-eighth (roughly 12-14%) business was on loans and the balance 7 out of 8 customers were anyway using a credit card.”
Monday, May 19, 2008
On seeing the reports of the internet security firm it is clear identity theft has become a serious problem for the financial services industry.
Many instances have come into limelight when people have found difficulty and incurred losses because of lack of financial awareness.
Here are some financial details that you should handle with care, and immediate steps you should take if you face an identity crisis.
In case you are applying for a second credit card, a new one never disclose details of the existing credit card or even provide a copy of both sides of the existing card as the data may be misused and could result in a loss. The card carries a three-digit or four-digit security code or card verification value (CVV) which could be misused.
You should also beware if you receive a call, fax or an e-mail or someone visiting in person, asking for details such as date of birth, mother’s maiden name, PIN and others because such information could be misused by crooks. Ravi Shankar, country head, directs banking, Yes Bank warns, “On various financial platforms, mother’s maiden name is used as a security password. Common numbers and alphabets such as mother’s maiden name and date of birth should be completely avoided as passwords.
Extra caution should be used while sharing details such as bank account number and date of birth and they should be done only on a secure platform. It can lead to impersonation, reputation risk and black mail.”
Do not respond to any query by an unknown caller who may impersonate as an agency representative doing a survey or compiling information. “It is important that the passwords, giving access to use of credit cards and other financial instruments, be carefully drafted and retained only mentally,” advises Khushroo Panthaky, partner, accounting & assurance services, Walker, Chandiok Grant Thronton.
There have been incidences where individuals have lost out on their entire savings due to such frauds. “Besides the financial loss, what pains the most is the mental harassment you have to undergo running pillar to post to resolve problems with the credit card institution, banks and police authorities,” says Panthaky.
In case you find something fishy in your financial statement, immediately inform your issuing bank and get the services of that product temporarily discontinued. In case your credit card details have been stolen and it is linked to a bank account, then standing instructions should be given to banks to immediately stop direct debits (towards payment against card bills).
Shankar says mostly the financial details are stolen from personal computers, internet and couriers, it’s important for customers to protect their PCs. “One should avoid the temptation of clicking on unknown sites and ensure that every courier from their bank has reached them untampered,” he adds.
Furthermore, bankers advise that all links to various accounts of banks and investments should be properly reviewed when closing an account. Panthaky has a word of advise for all — do not get fascinated by exciting opportunities to take more credit cards. He adds, there is a general insight that the more credit cards you have, the more credit you can avail of. At the same time, loss or misuse of credit cards can lead to a lot of mental torture and pain.
“The ATM cards also need to be carefully retained as some people have a habit to scribble the PIN on the paper strip behind the card. Scandals prevail all the time and smart cartels get access to a lot of confidential information to capture your savings of a life time,” he says.
Friday, May 16, 2008
There is a new type of offer for the credit card holders i.e. they can take loan against their credit card from the trader. In case of defraud, the police won't help because the loan-seekers are as much at fault as the conmen.
Crooked traders are giving ads in newspaper. On reading the ad when a credit card-holder turns up at the shop, he is asked how much loan he needs. His card is then swiped for the amount, plus a four per cent commission. The transaction is shown as payment against purchase of goods.
Instead of goods the credit card holder leaves the shop with the loan amount in cash. Later on the trader produces the transaction slip in the bank concerned and recovers the loaned amount, as well as the commission.
In the past month and a half,
"We can't help people who have been defrauded in this manner. A person can use his credit card to buy goods from a shop but can't take money from the shop-owner," said deputy commissioner (detective department) Jawed Shamim.
An officer of the detective department's fraud section said if they start taking up the cases then the complainants will have to be prosecuted along with the traders. "The victims often are left with no option."
He quoted the case of a complainant who took Rs 70,000 from a shopkeeper and was told that his card had been swiped for Rs 72,800 (Rs 70,000, plus commission of Rs 2,800). Later on when the cardholder received the statement he was shocked to see that the shopkeeper had actually withdrawn Rs 1 lakh. When the complainant went back to the shop, he was forced to leave away.
Another victim, Rana Banerjee of
Police said to stop such frauds people should take loan against a credit card from the bank instead of approaching traders.
Wednesday, May 14, 2008
A Mumbai-based chief of a public sector bank said, “Since, we cannot hike our prime lending rates (PLR), since the finance minister has asked us not do so, we will increase the sub- PLR rates which are availed of by the corporate cheaper than the PLR,”
On the other hand the country’s largest credit card player, ICICI Bank has crop up a concept of “tiered pricing”.
Simultaneously, the bank is claiming that it has reduced the rates.
Meanwhile the customers of few foreign banks are receiving their latest credit card statements in which the banks have started informing about the rate hikes.
According to the sources from Citibank, recently it has raised credit card rates and is charging the customer about 3-3.5% on a monthly basis. The other foreign bank, Netherlands –based ABN AMRO Bank has raised its credit card rates from 3.1% to 3.2-3.5% on monthly basis, which will be effective from June 1.
The ICICI Bank credit card customers will also be seeing rise in rates going up by 2%. As per the sources at present the bank is charging 1.51%-3.41% against a flat 2.99% earlier.
Let us see what is skimming and how it is done.
Skimming is the direct transfer of electronic data from the magnetic strip on a credit card or debit card to a card-reading device.
The skimmed data is then transferred from the reading device onto another plastic card having a magnetic strip on it. With this fraudster can create a card with the same characteristics and use it freely - till identified or caught.
Be careful skimming is illegal.
Generally skimming takes places at petrol stations, restaurants, hotels and such outlets where the swipe terminal is away from your sight.
What are the warning signs of skimming?
A shop assistant when takes your card out of your sight in order to process your transaction then there are full chances your credit or debit card details can be skimmed. In case you are asked to swipe your card through more than one machine. You might notice something suspicious (an attached device) around the card slot on an ATM. You notice a strange or unauthorized transaction in your account.
Safety measures from becoming a victim of skimming:
Keep your PIN safe. You should not disclose your PIN number to anyone. Keep watch on people who try to offer “help” at an ATM. Examine the ATM carefully before using it. If it doesn't look right, don’t use it. If an ATM has any unusual signage, don't use it.
In case your card gets stuck in the ATM machine after the transaction or after pressing ‘Cancel’, contact your card issuing authority immediately. Keep a check on your bank account statements to ensure that there are no unusual withdrawals.
Friday, May 9, 2008
In the past few months the credit card companies have hiked interest rates towards which cardholder are not paying attention. Over the past 2-3 months most of the major card issuers including ICICI Bank, SBI Credit Card and other leading players have hiked interest rates by 3-5%.
The procedure of charging the interest on credit cards is the interest is charged when a customer carry forward credit beyond the payment cycle. The monthly rate can range between 1% and 3.4%, translating to 12-42% on an annual basis. However there has been hike in overall interest rates therefore, card companies have also affected a hike.
ICICI Bank, is the largest issuer of credit cards with over 7.5 million live cards, has increased interest rates from 2.9% to 3.15%. Thus there is an annual increase of almost 3%.
Sachin Khandelwal, head of ICICI Bank’s cards portfolio said, “We have increased the interest rates on credit cards last month, which will be effective for the billing from August. Impact on the consumers will be known only in September. The hike is a consequence of the general tightening of interest rates and most big players have already done it. ICICI was in fact the last to do it.”
On the other hand SBI Cards, joint venture between SBI and GE Money is the second-largest issuer of cards in India, has also increased rates. Though, the company has defined the rates on parameters like spending and payment behavior. The charges have gone up from 2.99% to 3.1%.
“SBI Cards charges interest rates ranging from 0.99-3.1% depending on the spending pattern and payment behavior of the consumer,” SBI Cards & Payment Services CEO Roopam Ashthana said.
Experts expressing their views said other major credit card issuers have also hiked rates in line with leading players. But some companies do not mention the interest rate charged on the monthly statements sent out to customers, therefore these rate hikes often go unnoticed by consumers. However, some companies do send out reports regarding this.
“All applicants are advised of the maximum interest rate chargeable at the time of application, at the time of card issuance and thereafter every month in their credit card statement,” Mr Ashthana said.
He added provision for a change in interest rates is mentioned in the terms and conditions given to a consumer at the time of issue of card.
Mr P S Jayakumar, Country Business Manager, Citi India said the "2-in-1" transit card combines the benefits of the Metro smart card with the advantages of a credit card.
It is the first of its kind of credit card in India that doubles up as a contact –less access card for Delhi Metro stations, allowing users 'tap and go entry', along with the advantages of a Citibank credit card, and is available to customers from today.
Earlier in 2006, Citibank had conducted trials of the “tap-and-go” or contact less payment at select New York City subway stations, in association with MTA and MasterCard. Following the trials, the service was rolled out at the New York subway MTA. However, the DMRC co-brand card is associated with Visa.
In addition to convenience, the card will also offer several benefits, including exclusive shopping deals and discounts in Delhi and the national capital region (NCR), fuel surcharge waivers at Indian Oil outlets and other privileges associated with a Citibank Credit Card.
The card is unique in several other ways. It is a "Delhi Delights" offering unique deals from some of the biggest brands in Delhi, including Dominos, Fun Cinemas, Nirula's, Bercos, India Today and VLCC. The card also carries reward points. Reward points accumulated on this card can be redeemed for free Metro rides, at the Citibank point-of-sale terminals, which are presently installed at Rajeev Chowk, Kashmere Gate, Barakhamba, Pitampura, Rajouri Garden and Dwarka Mor Metro Stations. These are scheduled to soon spread across other stations as well. Additionally, the card offers double reward points for Metro spending, and will not require the mandatory security deposit of Rs50.
"Citi has successfully launched similar products in New York and Singapore, both of which have been extremely well received. We expect to launch similar products in more countries in the next few months," said Surath Chatterjee, regional head of card products, Citi Asia Pacific
DMRC's director for operations Raj Kumar says, "DMRC is always looking to improve the transit customer's experience. We believe this product is the next step in providing our travelers unmatched convenience and reduced waiting times by combining an efficient payment mechanism with the Metro experience." He further added, "We are in talks with the Delhi Government to extend the reach of the card to city buses." He said discussions are at a preliminary stage and if the proposal gets approved, the same card could be used for traveling by buses.
On the customer attainment through the agreement, P. S. Jayakumar country business manager, global consumer group, Citi India said about two lakh Metro commuters can become card users. He said Citigroup is having about 36 lakh credit card users in the country.
Mr Jayakumar, country business manager, global consumer group, Citi India said, "As the Metro extends its operations further into Delhi and NCR, and with the forthcoming Commonwealth Games in 2010, the Delhi Metro Citibank credit card will fulfill the need of a world-class product for hassle free travel and shopping."
The Special Privileges on the Delhi Metro Citibank Credit Card:
- 10 per cent discount on travel fare paid with the '2-in-1' card
- 2 reward points for every Rs100 spent on the Metro, 1 reward point for every Rs100 spent elsewhere
- Facility for converting all reward points into Metro Points for free Metro rides (at the POS terminal itself)
- Associated with Visa international, accepted at over 14 million merchant outlets worldwide
- 2.5 per cent surcharge waiver on IOC petrol pumps
- Five free lifetime add-on cards
- The ''Delhi Delights'' offers from the best brands of Delhi
Tuesday, May 6, 2008
Police found Gangster Venkat Reddy alias Aziz Reddy two international debt cards - ING Vysya and ICICI bank in his wallet during the panchanama by the Shaikpet tahsildar on Thursday. The investigating office had collected information about details and transactions of the used by the gangster.
According to the sources in the police department said the ING Vysya international debit card recovered from the gangster, was in the name of one Srujan Kumar of SBI colony at Bakaram near Gandhinagar. Srujan Kumar runs a computer institute in Gandhinagar. When police interrogated him, Srujan Kumar reportedly told them that he had given his debit card to one Pavan Kumar. He reportedly expressed doubts that Pavan Kumar might have given it to Aziz Reddy.
Surprisingly, Pavan Kumar is neither a friend nor a relative of Srujan Kumar. The latter told police that Pavan Kumar knew him as he did a two-and-half-month computer course in his institute.
Srujan Kumar got the ING Vysya Bank debit card in May 2007 and there were Rs 1.40 lakh transactions in the last one year. Police department sources said currently balance in the account is nil.
Police officers told press the other debit card, issued by ICICI Bank, was issued elsewhere. "We are waiting for details from ICICI Bank, Mumbai which may come in a day or two.''
Police told that they recovered another debit card from his car which was on the name of another person.
Meanwhile, the black Innova's owner Abu Bakar is still at large. From the investigation the police recovered that Bakar's father Humayun Khan is a 'tantrik' and Aziz Reddy used to go to him for the well-being of his family for the last 11 years. A month ago, he took his wife to Humayun Khan as she was not well, police said.
"We are trying to locate Aziz Reddy's wife's address. The only evidence we have is her photograph,'' a senior police officer said.
On Saturday evening in a press conference RBI executive director R B Barman told , "Inspired by the success of the China UnionPay card, we will be launching a similar one in our country to promote the use of plastic money among Indians. The credit card will be especially designed for the common people with low interest rates and risk reduction facilities.”
Barman said the National Payment Council of India (NPCI) is preparing guidelines for the registration process of the card. The NPCI authorities has been authorized to decide on the type of the card - whether it would be a smart card or something else.
"If all our plans and government procedures gel well then we can hope to release this card in the market by the end of 2009," he added.
The China UnionPay card was introduced in 2002. The card can be used at over over 85,000 ATM counters of 14 major and other minor banks across the world. Besides, the card can function as regular MasterCard or Visa credit cards abroad.
Friday, May 2, 2008
Sheeba, a former airhostess with Virgin Atlantic airlines, was murdered by motorcycle-borne assailants around 11.20 pm on April 8 in sector 31 while she was returning home from a party, in her car.
Earlier police had nabbed Lacchi who revealed the names of others involved in the crime. On April 18 police arrested main accused, Mukesh alias Mukhia who during interrogation confessed before the police that he and his three accomplices had killed her when she tried to fend off their attempt to rob her.
Gajendra Shrotriya, Station Officer of Sector 20 police station, on Wednesday told to press that Mukhia have confessed that he had hidden Sheeba’s credit card in bushes at an abandoned plot in Sector 37. He said, Mukhia took out the credit card, which bore Sheeba's name, from the bushes and handed it over to the police.
Meanwhile the third accused in the case, Ashok, surrendered at the Chief Judicial Magistrate's court at Noida. Shrotriya said the police would seek Ashok's custody.