Slower credit card growth in 2007-08

According to data released by the RBI, Credit Card growth slowed down in FY 2007-08 mainly due to defaults by consumers. Here are some latest facts,

• India now has 26 Million Credit Card users - 1/10th the size of Mobile Phone users :-)
• For FY 2007-08, growth in new credit card accounts was 18%, previous financial year 33%
• Minimum annual income to own a credit card is now Rs 120,000 + PAN Card + KYC compliance
• ICICI Bank is now the largest credit card issuing bank in India with 9 million cards.
• Defaulters on Credit card is up by 2% to 12% compared to 10% in FY 06-07

One of the reasons attributed to higher default rate is because other retail debt is demanding higher EMIs which has put pressure on individuals. Also over leveraging up to 20 times their annual income on loans has led to the rise of defaulters.

PNB Credit Card by October

India's second largest PSU bank, Punjab National bank which was seeking permission from the RBI to launch credit cards in India in association with AIG - American International Group has decided to go solo because of lack of clarity and clear signal from the RBI.

PNB will launch full fledged credit cards. Currently the bank is offering co-branded cards in association with HSBC wherein PNB sources clients while the risk and reward are reflected in the books of HSBC. However, going forward PNB will launch a wholly owned subsidiary by October-08.

PNB Official said,

We have decided to start it within the bank since it does not require any regulatory approval. Subsequently if the RBI approved the JV, we will hive off the credit card division.

PNB has a large customer base and it is really essential they launch the card division as slowly as possible with good customer care in place.

High Court Rules Against Citi Credit Card

In a landmark judgment which comes as a relief to the consumer, the High Court of Delhi has ruled against sub-prime loser Citibank's Indian Credit Card division.

Citi cards had filed a recovery suit against one Mr. Deepak for an amount of Rs 3.61 Lakh. The High court has granted stay to Deepak after hearing his version that the settlement amount in the above case was mere Rs 2.0 Lakh and not Rs 3.61 as claimed by Citi Card.

The High Court also made an oral statement saying - This case looks like a clear case of extortion by a foreign bank.