India Loses 2.2 mn Credit Cards in 9 Months

The latest data released by RBI suggest that the number of Credit Cards in India havedeclined by 2,2mn. In April 2008, there were 28.3 mn credit cards and in Dec-08, the number has fallen to 26.1mn.

Reasons for Decline in Credit Cards:
The main reason for negative Growth in Credit Cards is the Global Crisis as Banks turned extremely cautious to the situation. Upon expiration of the card, banks didn't renew for some customers and some canceled the cards voluntarily or by force from the banks.

Mr. Sachin Khandelwal, of ICICI Cards said,

None of the issuers have been aggressively marketing cards in the past few months. Credit card norms have been tightened. Issuers have raised the minimum income requirements across the board and also the cut-off scores for issuances on these cards.

Banks have not started canceling dormant cards as customers would like to keep their spend in control and use the card as a means of URGENT Credit only.

Industry observers are of the view that they have entered a consolidation phase where they will want to have GOOD customers with regular usage base. Bad Debts has risen from an average of 6.5% to 9.5% and many banks are now going to raise the interest rates further on overdue accounts.

Insurance companies offer cover for wallets

A group of insurance companies are gearing up to launch insurance products that would insure a person against losses arising from lost wallets.

Tata AIG Life is planning to launch products that would ensure a person against such losses. In addition the insurer would provide insurance cover for car or apartment, identity theft and purchase protection.

Bharti AXA General Insurance, Iffco Tokio General Insurance are some of the other players planning to launch such products.

However under this option the money lost will not be covered and insurance will be restricted to the replacement cost of a lost or stolen wallet, personal papers and the credit and debit cards in the wallet.

Besides, no, tickets coverage will be offered for cheques or fraudulent charges on the lost or stolen cards and any other identity theft-related costs.

There is another form of Card protection especially meant for Credit and Debit Cards. I am gathering information on the same and shall write a post ASAP.