Credit Card companies, mainly banks which in Greed to make Big Buck quickly by overcharging and harassing customers have conceded defeat that the business model was flawed. Most Credit Card companies operating in India depend on Direst Sales Associates the Crime Lords of Mis-Selling a product which they never understood.
In order to cater to regular paying customers and run the business profitably, banks like SBI, Kotak, HSBC are rejigging the model to,
- Let customers who want credit pay annual fees on their Cards
- Depending on their repayment record, slash the APR / interest rates drastically to around 16% from the current 36%
The move is to filter the bad customers which were brought to the bank by none other than their illiterate mis-selling agents. SBI suffered a loss of Rs 185 cr, while Kotak Bank lost Rs 70 cr in its credit card operations in the last FY.
SBI Cards Chief, Mr. Gupta said,
As a value proposition major, we are planning to reduce the APR on Credit Cards as the ban re-introduced Annual fees on cards in phases.
It is an MNC bank which will roll out lower interest rates to customers with good CIBIL credit history.
Deutsche Bank, HSBC are also likely to re-introduce Annual or Monthly maintenance fees.