Indian private sector banks are focused on retail lending, largely on account of process-driven lower turnaround time for lending decisions in the retail segment. Bureaus such as CIBIL, Experian and Equifax have played a key role in meaningfully reducing the probability of adverse selection by lenders, facilitating more sensible targeting and deeper mining of existing customer relationships. However, in the current cycle, the thrust is equally split between secured and unsecured (50:50) in contrast to 2007 where the mix was skewed towards unsecured (nearly 70%-80% of the proposals during 2007 were unsecured in nature).
It is not uncommon for the Indian Youth to opt for a Credit Card as soon as they join the workforce and without realizing the consequences they head towards debt trap. Here is a Case which CardBhai’s Team Counseled and with Prior Written Permission of the Client we are publishing his Case Study so that this will help other Credit Card Borrowers / Defaulters understand the impact on Credit Scores.
Raj had a Citibank Credit Card account opened in May-2006. He made regular payments until Oct-2006 and then began to delay which immediately starts getting reflected in his CIBIL Credit Report. He tried his best to regularize his payments but on and off and was negotiating with the bank’s call center executives already for EMIs etc. However, matter became worse and in Aug-07 and Citibank finally decided to BLOCK the Card A/C. Summary of his First leg of Transactions and Payments as reflected in CIBIL Credit Report is Shown below.
Now that we are getting lot of e-mails on the subject of what does the Actual RBI / Ministry of Finance Rules state on the Status of a Loan Account / Credit Card mutually settled between the Bank and the Customer. We had asked the RBI this Question,
In case of a Loan / Credit Card account settled mutually between the Bank and the Customer after the customer had defaulted on payments, I would like to know, what the Bank is supposed to update at Credit Bureau – CIBIL for “STATUS” column of this particular account under consideration in accordance with RBI rules / regulations / guidelines / act / etc. Kindly provide photocopy of appropriate RBI legal document / documents relevant to this subject.
RBI’s Response to the Question is as follows,
You may kindly