Credit Card Most Profitable Business of Indian Banks

Credit Card lending is the most profitable business vertical of Indian Bank / Financial services company. High profitability is driven largely by the high yielding unsecured credit business. While share of fee income is high in total revenues (~50% of total income net of interest expenses), most of the fees (penalties, etc.) are credit-linked. The credit card penetration in India is quite low at 62 Cards per 1,000 working people.

Fees such as annual subscription charges are also largely recovered from customers that are borrowers or who have very low spending. The affluent customers, normally the transactors, account for most of the spending and help the credit card issuers screen as a potent marketing channel to manufacturers / traders. This enables the credit card issuer to

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Why Can’t RBI Have Clear Laws on Late Fees / Over Limit Fees ?

Late Fee Over Limit Fee ScamThe Indian Banking Regulator – RBI publishes Master Circular for Credit Card Operations in India binding on the Banks / Financial Institutions. However, there are lot of shortcomings in the Notification especially when it comes to Late fees / Over Limit Fee levy. RBI without going into the details just asks the Bank to be Fair in its Practices and give Unilateral Powers to Banks without approving Card Members Agreement which changes quite often at the will & wish of the Bank. Most Banks Like HDFC & ICICI use Algorithms to maximize profits and this leads to Grievance in which Consumers are always at the receiving end. Let us discuss this with a case study of our reader who has enlightened his plight of

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