PayPal reports technical problems in the UK news

Global online payment solutions provider PayPal is facing technical problems in the UK, which have led to delays in payments to customers.

According to a company spokesman, PayPal decided to speed up the process of payments, crunching the time for transferring funds to a customer's bank account from three working days to just a few hours. In the process, there was a surge in the volume of business, leading the firm to increase the number of transactions being sent for security checks.

Payment providers like PayPal have to, as per regulations, send a given number of transactions for security checks. But with the spike in volumes of transactions, the company's system became overloaded, leading to the technical glitch.

''We have had some technical issues which mean more transactions than usual are being reviewed for risk reasons,'' the spokesman said. The underlying issues have now been resolved and the firm hopes to sort out the issues by the end of the week. ''Although most withdrawals are not subject to review, a minority of customers have been told it may take up to 24 hours for us to review the transactions.''

Founded in 1998, the San Jose, California-based company was acquired by eBay in 2002. A significant amount of transactions on PayPal are payments made or received relating to sales on the auction site.

A safe and easy way to get paid online, the service allows anyone to pay in any way they prefer, including through credit cards, bank accounts, PayPal Smart Connect or account balances, without sharing financial information.

PayPal has more than 153 million accounts worldwide and is available in 190 markets and 24 currencies. The company claims it enables global ecommerce by making payments possible across different locations, currencies, and languages.

The online payment solutions firm has been facing problems in India, with the Reserve Bank of India (RBI) curbing its operations. The central bank had last year directed PayPal, which functions almost like a bank, but was beyond its purview, to comply with its guidelines. This forced the company to virtually stop operations in the country.

However, recently it signed up with E-Billing Solutions (EBS), an Indian online payment provider, which has become the first channel partner in India for PayPal. Over 5,000 online merchants of EBS can now add PayPal as a payment option to their merchant accounts.

''India is a prominent market for us and we are delighted to partner EBS to help Indian exporters sell to our global customers in 190 markets across the globe,'' said Mayur Patel, India country manager, PayPal.

Apple's Indian dilemma continues

The Apple iPhone 5 is not expected to hit Indian stores anytime before October end or perhaps early November, a good 30-45 days behind the official launch that happens today (September 21). Officially, Apple India representatives have not confirmed any launch date. Should that prevent enthusiasts from bringing home the new iPhone 5? Absolutely not.

The nearest Apple markets where one can get an official iPhone 5 is Hong Kong or Singapore. In fact, the iPhone 5 price is a good Rs 40,000 less than what some sellers on Indian e-commerce site Ebay.in are offering. For instance, at the Apple authorised stores in HK, iPhone 5 starts at about Rs 39,000 while iPhone 4S is starts at Rs 32,000. Or if you opt for an iPhone 5 from Singapore, it will cost Rs 42,000 (and upwards) while the iPhone 4S starts at nearly Rs 45,000 (and upwards). The iPhone will be available today in the US, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and the UK.

But before you rush out to buy iPhone 5 or the more affordable iPhone models from international markets, remember every iPhone comes with one year of hardware repair coverage through its limited warranty and up to 90 days of complimentary support, both valid only in the country of purchase. In practice, you can take a faulty iPhone to any Apple Store or authorised reseller worldwide for troubleshooting and tech support, but that may cost extra money.

Consumer forums and tech blogs in India are agog with posts questioning Apple’s intent to bring its latest devices in emerging markets like India. It’s not hard to see the reason. We ended 22011 with an installed base of about 24 million smartphones and are expected to grow the smartphone sales around 77% in 2012. As per estimates from Convergence Catalyst, of the total smartphone market in India just about 1.3 million devices are those that can be categorised as the premium end smartphones (priced above $400 from Apple iPhone, Samsung Galaxy S series etc). Analysts at Convergence Catalyst believe that Apple iPhone models (3GS to 5) can clock sales of about 240,000 in India provided the company can launch the new iPhone 5 by Diwali (November) and cash on the festive season sales. 

But compare this number with Apple’s core market, the US where 46.9% of mobile users have a smartphone which is nearly 110 million (comScore data), and they pale out. Apple, with an estimated 29% smartphone market share in the US, competes closely with Samsung.

What’s also making it easier for Apple to sell its devices in the US is the high carrier subsidies that make a $600 smartphone cost about $200 for the consumer. Internationally, users typically buy the phone at full cost. That’s where manufacturers such as Samsung manage to snap their share of customers by creating lower-end Android devices that are marketed off at reasonable costs. Further, multi-layered retail distribution system in India, unreliable 3G coverage, lack of credit cards to buy apps and music from Apple’s app store, and close to zero operator subsidies make it harder for Apple to apply its “proven sales theory” in India.

Until Apple finds a suitable sales strategy for emerging markets, they will continue to lose out to the Samsungs and HTCs that create quality devices at reasonable prices and have mastered the retail distribution too. Just as a successful debut is critical to Apple since it releases just one new smartphone model a year, CEO Tim Cooks also needs to figure out a way to penetrate India that brings a completely new market. Today, Apple is enjoying unrivaled success in the US and the EU but it won’t last if they cannot find a way to tap into emerging markets.


*Prices are indicative of currency conversion rates as of Sep 20

http://www.business-standard.com/india/news/apples-indian-dilemma-continues/187678/on

HDFC Bank uses technology-led marketing to keep costs low

 A marketer who helped revitalise the sales of chocolate brands such as Picnic, Perk and 5-Star for Cadbury and launched India's first end-to-end portal to buy insurance for ICICI Lombard, is now busy changing the way the country's largest issuer of credit cards and auto loans markets itself.

Kartik Jain, 42, executive vice-president and head marketing at HDFC Bank, has been pushing result-oriented local and digital marketing since he joined India's second-largest private bank last year.

"We want our marketing campaigns to result in at least thrice the revenue they cost," says Jain, an IIT and IIM alum.

He launched some 4,000 campaigns and 400 analytical solutions (a 40% y-o-y increase) in the past year to bring in more customers to the bank and aggressively stepped up its digital presence to increase business from this channel by over 60%.

Jain, a keen trekker who has run three half marathons (and wishes he had time for more), is pushing his colleagues to shift away from a centralised marketing function, and think local by setting up local marketing teams to cater to specific needs of a community or locality. "I want our marketers to focus on the catchment areas around branches and run campaigns to suit residents or businesses there," he says.

His result-oriented approach is something his rivals and industry watchers admire. "He's an objective-driven marketer who has been able to effectively leverage technology and digital programmes," says Sanjay Jain, chief marketing officer of Reliance Capital. HDFC's Jain stands out for his focus on return on investment and not spread across many hard-to-measure campaigns, he says.

Ajay Kelkar, COO of customer relationship solutions firm Hansa Cequity, says Kartik Jain uses technology and digital media more effectively than most of his peers. "This gives the bank an opportunity to get one view of the customer and, in a muted economy, opens up better opportunities to cross sell products," he says.

As marketers become more concerned with cost, the idea of highly visible above-the-line advertising rarely appeals to Jain. "We haven't done a big-ticket campaign in 2-3 years," he says. Instead, the ads will be targeted, like its Infineon credit card ads pegged at big spenders.

While he wouldn't disclose his marketing budget, Jain says HDFC Bank spends less than one-fifth of it on above-the-line activities, with the rest reserved for below-the-line campaigns. "Marketing is about customer engagement that leads to measurable business results," he says.

While it's a challenge to get close enough to customers to garner key insights for new campaigns, marketers like Jain are increasingly under pressure to reduce spends in a slowing economy.

Jain is leaning heavily on digital campaigns to proselytise HDFC Bank. Under him, the bank's website has become the most visited private bank website and the most responsive bank on Facebook, according to a survey by Social Bakers in May 2012.

"With increasing penetration of internet and mobile, digital marketing has become an inexorable element of marketing...this is especially true in the case of financial services, where products and services cannot be distributed efficiently without the use of technology," Jain says. Parag Rao, who heads HDFC Bank's credit card business, says while Jain's overview across the bank's businesses has allowed him to synergise marketing campaigns, his data analytics team is a welcome bonus.

http://articles.economictimes.indiatimes.com/2012-09-21/news/34002425_1_sanjay-jain-hdfc-bank-campaigns

HSBC to pay Rs 20,000 compensation to credit card holder

Hongkong and Shanghai Banking Corporation (HSBC) has been ordered by a consumer forum here to pay Rs 20,000 as compensation to one of its credit card holders for adding his name in CIBIL's defaulters list even though he had paid all his dues.

While awarding the amount to the HSBC credit card holder, the New Delhi District Consumer Disputes Redressal Forum said the Bank should have "gracefully" accepted its fault instead of adopting an "obstructionist attitude" by seeking rejection of his complaint.

"We are shocked to observe the obstructionist attitude of opposite party (HSBC) which instead of accepting the fault gracefully by filing a reply, has sought rejection of the complaint on ground of remedy of arbitration under the Credit Information Bureau (India) Limited (CIBIL) Act.

"It (HSBC) has not disputed facts. The remedy under the Consumer Protection Act is not affected by the arbitration agreement. We dismiss the application of the opposite party and award a compensation of Rs 20,000 to the complainant (Rakesh Gupta) inclusive of litigation expenses," said the bench presided by C K Chaturvedi said.

Delhi resident Rakesh Gupta in his complaint had alleged that he had been issued a HSBC credit card on understanding that no annual charges would be levied, yet after the first two months of usage the Bank started levying the charges.
When he made a representation to the bank about annual charges, the same were reversed temporarily, he said adding in 2006 he paid all the outstanding dues and asked the bank to close the card.
Gupta alleged the bank, instead of closing the card, continued showing the annual charges as outstanding and informed CIBIL that he was a defaulter, without giving him a notice.
The bank had sought dismissal of the complaint against it on the ground that the remedy available was through arbitration only.

http://www.business-standard.com/generalnews/news/hsbc-to-pay-rs-20000-compensation-to-credit-card-holder/58746/

SBI Cards expects Rs.2,700 crore total asset base‏

SBI Cards, the second largest credit cards issuing firm in India, is expecting that its total asset base would be around Rs.2,700 crore at the end of this fiscal with issuing of about 575,000 new credit cards, a top company official said Thursday.

The firm, a joint venture between State Bank of India and GE Capital, currently has an asset size of Rs.2,500 crore.

"In the last financial year it (total asset base) was around Rs 2,200 crore. For the last few months the asset size growth has been tremendous because of corporate cards and increasing trends towards spends and a lot of festival offers given by the retailers," SBI Cards chief executive officer Kadambi Narahari told media persons here.

"The trend of asset growth is very good. I will not be surprised if it grows up to around Rs.2,700 crore at the end of the current financial year," Narahari said. The standalone credit-card company made a big foray into corporate cards segment by issuing about 500 corporate cards already in this fiscal. "Our target is 800 corporate cards in this fiscal. And in the next financial year, our target is to issue 1,200 corporate cards. This is basically for travel, holiday and entertainment spending, given with a corporate salary package," the official said. He said that despite a current overall slowdown in the economy, the company has witnessed increase in the number of issue of credit cards for a couple of months. In the last three months, it has issued on an average 48,000 cards in every month.

In the last financial year, SBI Cards issued about 400,000 cards. This fiscal, it expects to issue 575,000 new cards, of which about 20 percent will be in tier-II cities.

According to Narahari, spending per cards in the industry is about Rs.40,000 to Rs.45,000 annually and it is going up by about 10 percent to 12 percent every year reflecting inflation.

"In the festive months we see a trend of increasing spend of 20 percent to 25 percent per card," he added.

http://www.newstrackindia.com/newsdetails/2012/09/13/278--SBI-Cards-expects-Rs-2-700-crore-total-asset-base-.html

Credit Card Repayment in Cash to be Expensive for HDFC Bank Credit Card

Prepare to fork out a higher service charge while paying your credit card bill in cash. HDFC Bank, the largest issuer of credit cards in the country, has decided to double its service charge for cash payments at its branches or automated teller machines (ATMs).

“Dear HDFC Bank credit card member, the fee for cash payment made at HDFC Bank branches or ATMs will be revised to Rs 100, effective November 1,” read text messages and emails the private lender sent to its customers.

Currently, the bank charges Rs 50 as cash processing fee.Sources confirmed the service charge would be raised in November, adding the bank had kept other charges related to credit card transactions unchanged. They said other large private and foreign lenders had already raised credit card transaction fees in recent months.
ICICI Bank and Citibank charge a service charge of Rs 100 for credit card repayments through cash at their branches.
Bankers said the move was aimed at encouraging customers to us online services offered by banks.
“These are small transactions and should be done through net banking or other online services. We want customers to become savvy,” said a senior official with a private bank, on condition of anonymity.
Earlier this year, large private lenders in the country had increased service charges on savings accounts, including penalties for inoperative accounts, cash deposits over particular amounts in bank branches and mobile transfer fees.
http://www.business-standard.com/india/news/from-november-pay-more-for-credit-card-repayment-in-cash/486395/ 

SBI GE Cards plans!!!

SBI Cards, the second largest credit card issuer in the country, expects to wipe out its accumulated losses over the next three-to-four years, Chief Executive Officer Kadambi Narahari says.

“We now have a very strong business model. The diversification into corporate cards business, the use of e-apply channels for (client) acquisition, and (business) partnerships with banks and companies are driving our growth. We are confident that in next three-to-four years we will be able to erase all our accumulated losses,” Narahari said.

The company plans to leverage its business partnerships with co-brand partners like Oriental Bank of Commerce, Karur Vysya Bank, Bank of Maharashtra, Maruti Suzuki India, SpiceJet, Tata Group, Yatra and Indian Railways to drive growth. It has also recently entered the corporate credit card market with its SBI Platinum Corporate Card.

SBI Cards has introduced an online application ‘Click2Card’ that will allow an individual to apply and get approval for a credit card online.
The move is aimed at strengthening its customer acquisitions through electronic channels.
The company, a joint venture between India’s largest lender State Bank of India and GE Capital, started its operations in 1999. However, it turned profitable only in financial year 2010-11.
Narahari did not share further details on the company’s financials. “We are a private company. I cannot reveal more. We broke-even in 2010-11 and had very good profits in 2011-12. This year also, we expect strong growth in our earnings,” he said.
According to rating agency CRISIL, SBI Cards’ net profit in 2011-12 was around Rs 38 crore, compared with Rs 6.7 crore in the previous financial year. The company’s total income last financial year was at Rs 640 crore, almost flat compared to 2010-11.
The credit card company currently has a base of 2.3 million cards and is only next to HDFC Bank and ICICI Bank. In terms of issuance, however, it occupies the second spot after HDFC Bank and issues around 575,000 cards annually.SBI Cards has set a target of issuing one million credit cards annually from 2014-15.
http://www.business-standard.com/india/news/sbi-cards-to-wipe-out-accumulated-losses-in-three-four-years-says-ceo/486396/

HDFC Bank launches credit card for teachers‏

HDFC Bank on Wednesday announced the launch of credit card for teachers, coinciding with the celebration of Teachers Day.

The card offers special features like multiple reward points, weekend bonanza points, petrol surcharge waiver and 500 special gift reward points to be credited annually on the Teachers day, HDFC Bank said in a statement.

With a combined market size of more than 450 million students and growth rates of 10-15 percent expected over the next decade, education is one of the largest service sectors in India, the statement said.

"Like the doctor's credit card that we launched recently, HDFC Bank's Teachers Credit Card is a small token of appreciation towards lakhs of teachers across India who play a pivotal role in shaping the lives of millions of children," said Parag Rao, Senior Executive Vice President, Business Head, Credit Cards & Merchant Acquiring Services, HDFC Bank.

The bank said that it is the largest issuer of credit cards in the country with a customer base of 5.60 million as of March 31, 2012. 

http://zeenews.india.com/business/news/finance/hdfc-bank-launches-credit-card-for-teachers_59632.html

Credit card usage 30 times that of debit card payments annually: RBI‏

Indians use a credit card for an average payment amount of about Rs 55,000 in a year — which is nearly 30 times the money spent through debit cards.

However, the number of debit cards in the country is more than 15 times than that of credit cards, shows an analysis of data available with Reserve Bank of India. At the end of the last fiscal, 2011-12, there were 1.76 crore outstanding credit cards in the country, which rose further to 1.8 crore by June 2012. On the other hand, the number of debit cards stood at over 29 crore as on June 30, 2012, up from 27.8 crore at the end of last fiscal, the latest RBI data shows.

During 2011-12, the total amount spent through credit cards was Rs 96,614 crore — giving an average transaction size of Rs 54,738 per card in a year. In comparison, debit cards were used for transactions worth Rs 53,432 crore in 2011-12, leading to an average transaction size of Rs 1,920 on every card in a year.

A credit card allows the person to pay for goods and services based on a promise to repay the money to the bank with some interest costs, while a debit card facilitates payments from the actual amount lying in the customers’ bank accounts.

In the first quarter of the current fiscal, the average credit card transaction size for a year is nearly 29 times of the debit card payments. In the April-June 2012 period, Rs 28,465 crore was spent through 1.8 crore cards, giving an average of Rs 15,805 for these three months. In comparison, the average transaction amount for this period was Rs 528 per debit card.

Over the last five years, the average credit card transaction size has grown nearly three-times from Rs 19,554 in 2005-06 to Rs 54,738 in 2011-12 as economic growth fuelled consumer aspirations as well as purchases.

On the other hand, the average payment size for debit cards during the same period stayed largely stagnant, rising from Rs 1,185 in 2005-06 to Rs 1,920 in 2011-12.

This is despite the number of credit cards remaining largely unchanged from 1.7 crore in 2005-06, while the number of debit cards has risen sharply from 4.97 crore in that year.

Experts say that one of the reasons for the lower debit card transaction size could be the frequency of usage. A credit card was used by its holder over 18 times in 2011-12, while a debit card was used barely once on an average.

The number of credit card swipes in a year has doubled from nine times in 2005-06, while the debit card usage inched up from 0.92 times to 1.18 times during the same time.

The wide difference in deal sizes is also partly explained by the trend that credit cards are mostly used to purchase high-value items, while a debit card is used just as an alternative to the cash.
http://www.thehindubusinessline.com/industry-and-economy/banking/article3865957.ece

Credit card spend touches record high in first quarter

Credit card spending in the country touched a record high during the April- June quarter, thanks to innovative incentives offered by card issuers to their customers.

In the first three months this financial year, consumers spent Rs 28,465 crore on their credit cards across point-of-sale (POS) terminals, latest data released by the Reserve Bank of India showed. On a sequential basis, spending on credit cards increased 9.9 per cent, its fastest rise in the past four quarters.

Bankers said consumers spent more on credit cards in April-June than in financial year 2003-04 and 2004-05.

The risk of defaults has declined sharply, as banks now have access to credit bureau data to study customers’ credit history. Hence, the offers that disappeared from the market during the financial crisis of 2008-09 are back,” said Jairam Sridharan, senior vice-president and head of consumer lending and payments at Axis Bank.
“Merchants and credit card companies are partnering each other, thinking of creative ways to increase spends on credit cards. Hence, we are seeing this trend,” Sridharan added.
According to bankers, the incentives offered for credit card usage and the growing acceptance of plastic money have contributed towards the rise in spend.
Bankers said many consumers, who were so far using only debit cards, are now shifting to credit cards to take advantage of the interest-free credit period. Most consumers still prefer to pay off their dues before the expiry of the due date, they said.
“Indian consumers are becoming savvy and prefer to use credit cards to avail the interest-free credit period and the discount offers by large retailers in the country. They still prefer to pay the entire amount before the due date. As the market matures, we expect more and more customers will start using the EMI (equated monthly instalment) option,” said Kadambi Narahari, chief executive officer of SBI Cards, the credit card joint venture between State Bank of India and GE Capital.
While retail purchases and travel expenses still form the majority of credit card spending, consumers are also using their cards to pay insurance premiums and mobile phone bills.
“The spends growth has been fairly healthy. A number of options are now available to consumers for using credit cards. You can pay your utility bills or book a movie ticket. There are incentives to encourage spending in these areas. For instance, there are offers where if you buy a movie ticket using your credit card, you will get another ticket free,” said Shyamal Saxena, general manager for retail banking products and consumer banking at Standard Chartered in India and South Asia.
At the end of June, the number of credit cards in the country was 18.01 million.

http://www.business-standard.com/india/news/credit-card-spend-touches-record-high-in-first-quarter/483385/

HDFC Bank introduces premium credit cards for doctors

HDFC Bank, a private sector bank, has introduced two new credit cards for Doctors - Doctor's Superia and Doctor's Platinum cards.

According to the Bank, these premium credit cards are designed to cater to the lifestyle, travel and other needs of doctors.

Parag Rao, Business Head, Credit Cards & Merchant Acquiring Services, HDFC Bank, said: "We have always believed in offering every Indian a product he wants. Doctor's card is another step in that direction. Doctors play an important role in our lives and society, we acknowledge that they are special and need a product that makes their life easier."

Apart from welcome benefits, Doctors Superia members will be able to access more than 600 airport lounges around the world, irrespective of the preferred airlines or class. Members of the Doctors range of cards will also benefit from the reward point redemption across all major airlines in India, the bank added.

SBI launches online credit card application service

 

Credit card issuer SBI Cards has launched its online application service Click2Card.

“With the internet and e-commerce boom in India, customers are increasingly looking for financial products online,’’ Kadambi Narahari, CEO, SBI Cards and Payment Services Pvt Ltd, said while launching the service today.

Targeted at the internet-savvy customers across India, Click2Card allows customers to enter their details on a secure web interface.

The customer can select a credit card from the choices offered. The interactive platform intuitively advises applicants on the credit card best suited for their lifestyle.

Customer’s application for a credit card is approved, declined or referred on the basis of the credit history with the credit bureau and the SBI Cards risk and policy norms.

The customer is updated on the status of his/her request instantly. For all approved or referred applications, the system sends back a “soft” approval (approval in principle) and the assigned credit limit.

The death of Barclays’s retail initiative

The lone Mumbai branch of Barclays Bank Plc is located on the sixth floor of Ceejay House in Worli. There’s a small metal sign on the door but not much else. The British bank’s India corporate headquarters is on the eighth floor of the same building, a prestigious business address in central Mumbai.
The branch, one of nine across India, was located some blocks away on Dr Annie Besant Road until 30 June. A few years ago, advertisements on lamp posts clearly marked out the way to the Mumbai branch of the UK’s fifth largest bank by market capitalization.
Barclays is no longer as keen on public attention because it’s winding down the retail business, focusing instead on corporate and investment banking, along with wealth management in India.
When Barclays started commercial banking operations in India in 2006, billboards across Mumbai trumpeted its arrival. It entered retail banking in Asia’s third largest economy the following year, sensing enormous opportunity from a rising middle class with disposable incomes looking to buy homes and cars. The bank first ventured into India in 1990 through Barclays Capital, its investment banking arm.
The Indian economy was growing at a pace of 9.5% at the time. A big-bang credit card launch followed with an aggressive push for customer acquisition; credit limits were much higher than at other banks.
In hindsight, the timing couldn’t have been worse. As Barclays’ India retail push hit its peak, the global financial crisis slammed markets and economies.
“They were very bullish on India and that reflected in the pace of their investments. They had a great team but then the crisis happened,” said an employee who joined the bank in 2008 and left in 2010.
The credit card business was sold to Standard Chartered Plc and Kotak Mahindra Bank Ltd in December 2011. The mortgage, personal loan and commercial banking assets may also be sold, although officials at the bank haven’t confirmed that.
Barclays has shut the 39 automated teller machines (ATMs) it had. None of the branches, albeit sparsely manned, has been closed as getting a licence for one in India is not easy for a foreign bank.
Six years ago, the country was seeing a boom in the credit card and personal loan business. Local lender ICICI Bank Ltd was signing up customers in droves. Citibank NA was aggressively expanding its non-banking arm CitiFinancial, looking for a bigger slice of the pie. Deutsche Bank AG had even re-entered retail banking in 2005 after having wound up its initial venture into the field in 2000.
India’s per capita income almost doubled from $530 (around Rs. 29,550 today) in 2003 to $1,030 (around Rs. 56,650 today) in 2008 and banks wanted to take advantage of the rising appetite for personal loans, credit cards and automobile finance.
Caught in the middle
The party didn’t last beyond 2009. CitiFinancial piled up bad assets and had to shrink its business. ICICI Bank saw surging defaults and sharply curtailed its retail business, riding out the troubles thanks to its substantial commercial banking business.
By 2009, Barclays had half-a-million credit card customers, having piggybacked on its sponsorship of the English Premier League. Its aggression was evident from the rapid rise in employees. Between 2006-07 and 2007-08, headcount increased eight times to 2,078 from 265; profit per employee dropped to Rs. 50 lakh from Rs. 36.28 crore and return on assets dropped to 0.10% from 4.45%. Barclays got caught in the middle, having been too aggressive with credit cards and personal loans being given to customers with whom it didn’t have any other relationships.
There was a reluctance at the UK headquarters to make hard decisions, said another former executive, who didn’t want to be named citing contractual obligations.
“Barclays was very indecisive despite advice from India that it is not wise to continue giving loans to individuals. They had just announced a big-bang business plan in India, Africa and Middle East and opened a lot of branches in 2007. In 2008, after the crisis broke out they were reluctant to close any branches, fearing uncomfortable questions from shareholders,” the executive said.
While other foreign banks and local lenders acted quickly to contain losses, Barclays waited until late 2009 to curtail its retail operations.
According to Reserve Bank of India (RBI) data, the UK bank’s non-performing assets (NPAs) swelled to Rs. 1,235 crore in 2008-09, or 4.59% of net advances, from Rs. 61 crore, or 0.42% of net advances, in 2007-08.
In 2009-10, this rose further to Rs. 1,422 crore or 5.15% of net advances. At the time, Barclays had seven branches and Rs. 7,565 crore of advances. Hongkong and Shanghai Banking Corp. Ltd (HSBC), which led on NPAs among foreign banks at Rs. 1,683 crore in 2009-10, had 50 branches and Rs. 23,475 crore of advances.
Management shake-up
The period also coincided with an upheaval in the Barclays boardroom. The international retail and commercial banking business was handled by Frits Seegers, who was bullish on the Indian market. Seegers quit in November 2009 after a board room shake-up that saw him being divested of some of his responsibilities.
Bob Diamond, then president and later chief executive, was put in charge of commercial banking, while retail was taken over by Antony Jenkins, then chief executive of Barclaycard, the credit card business. (Diamond quit in July over allegations that Barclays had participated in rigging the benchmark London inter-bank offered rate or Libor. Jenkins is among those tipped to replace him.)
“Seegers’ exit and the large losses from India forced headquarters to change the strategy and the bank finally started to unwind retail loans,” said the executive cited above.
The new management, led by Diamond and Jenkins, was more inclined towards investment banking and wealth management. These, along with corporate banking, became the new focus outside the UK.
“In March 2010, Barclays announced changes to the group structure to improve the alignment of our products and services to our customers across the markets in which we operate,” said a Hong Kong-based Barclays spokeswoman in an email. “We took a decision then to sharpen our focus in India on corporate and investment banking and wealth management and to reduce over time our retail banking presence to a core network of branches serving the high net worth individuals segment.”
The loan defaults in India had arisen from job losses in sectors such as information technology and business process outsourcing (BPO). Workers in these sectors had been the main beneficiaries of personal loans and credit cards.
Banks were also hit by RBI’s guidelines on loan recovery from individuals after allegations of excesses in recovering money in 2008. Banks could no longer track down defaulters to their homes and offices. They could only use recovery agents who had undergone 100 hours of training at the Indian Institute of Banking and Finance (IIBF). All this slowed the loan recovery process.
The 2008-09 jump in bad loans in the retail segment showed that lending to individuals has hidden costs in distribution and credit margins, said Robin Roy, associate director, financial services, at audit and consultancy firm PricewaterhouseCoopers (PWC).
“Without a large branch network, retail banking doesn’t work,” Roy said. “Foreign banks have also realized that they may have the best of banking models but unless they have credit information data, those models won’t work in India.”
Need for commitment
Building a branch network in India can be slow and painful for a foreign bank. In 160 years, HSBC has got 50 branches in India.
New banks in India need to have patience, especially when it comes to retail banking, said Saurabh Tripathi, partner and director at The Boston Consulting Group, a strategy and management consulting firm.
“It takes seven to 10 years along with diligence to show results,” he said. “Banks like HSBC, Standard Chartered and Citibank have been successful because they have stayed the course. Barclays, on the other hand, was aggressive when it entered but couldn’t recover from the headwinds it faced post the financial crisis.”
Barclays has, however, been a consistent performer in investment banking. So far this year, the bank is second with 54% market share and a total deal size of $15.36 billion, just behind Morgan Stanley’s $15.48 billion in mergers and acquisitions in India, according to the Bloomberg league table. In 2011, it was No. 3, behind Morgan Stanley and Goldman Sachs with a 25% market share and $17.02 billion in deal size.
While banks like Barclays can’t ignore India, they need to look beyond the big cities, said PWC’s Roy.
“They have to look beyond the cities into the hinterland where there is a huge untapped opportunity,” he said. “But for that they will have to grind harder and shed dependence on off-balance sheet revenues and fee income. Retail banking requires commitment. Banks need to fight out one or two credit cycles and stay put for 15 to 18 years to see results.”
To be sure, Barclays did look beyond the big cities. It had wanted to tap the market beyond tier I cities by opening branches in Kanchipuram, Nelamangala, Junagadh, Ahmednagar and Rajahmundry (its other branches are in Pune, Hyderabad and Delhi, besides Mumbai). But it gave up on the plan because of the rising bad loans. With the focus shifting, the minimum balance for savings accounts has been raised to Rs. 1 lakh from Rs. 10,000 while loans to individuals have been stopped. Customers are being advised to close accounts if they can’t service the minimum balance requirement.
“There are very few customer attendants in our branches now and we have no ATMs. We would advise you to keep these things in mind before opening an account with our bank,” said an executive at its Worli branch.

http://www.livemint.com/2012/08/28201112/The-death-of-Barclays8217s.html

  

Young Indians spend 16% of expenses online

Young Indians in the age group of 18-28 years are playing a significant role in promoting online transactions. According to a survey conducted by Visa, a global electronic payment company, those people spend 16% of their monthly disposable income online while they are ranked third among 16 Asia Pacific countries with total annual disposable income of Rs 7.73 lakh crore.

However, the figure is way below the global estimates wherein young consumers are already living the digital life with 60% of those surveyed saying they are already transacting online using their personal computers or laptops, and nineteen percent on their mobile phones.

"We believe the Millennials play a significant role in boosting electronic payments in India. They have an active digital lifestyle and are embracing new payments technologies. At Visa we see mobile and online payments as a game changer and we're providing the Indian Gen-Y with advanced and robust electronic payments technology to drive growth towards a cashless and a more efficient environment," Uttam Nayak, Group Country Manager - India & South Asia, Visa said in a release.

Millennials is the coinage that denotes people in the age bracket of 18-28.

Among those who purchase online, four in 10 make online purchases at least monthly, indicating a healthy appetite for buying online. However, 24 percent of the millenials prefer cash on delivery as the most preferred payment method for online purchases, followed by debit card which is preferred by 21%.

"There is a strong opportunity for the growth of debit cards in general as it is the preferred payment product for four in 10 Indian millennials and 47 percent use it especially for high value payments of over Rs. 1,000," the survey report said.

The survey has also identified several drivers that indicate how millennials today are increasingly embracing electronic payment methods. 71 % of the millennials interviewed look for security over convenience, acceptance, and flexibility as the most important product features across different payment methods, according to the survey.

"Ability to pay over time, use for unplanned purchases, maximizing rewards program, getting discounts, not having to carry cash and convenience over cash are the key drivers motivating the millennials in India to use credit cards," it said. 

Jet Airways and ICICI Bank launch co-branded credit cards

Jet Airways, India's premier international airline and ICICI Bank Ltd., India's largest private sector bank, have announced the launch of the “Jet Airways ICICI Bank Credit Cards”, a suite of co-branded cards offering exceptional value to JetPrivilege members and the country's growing community of frequent flyers. In keeping with the lifestyle of the evolved traveller, the card privileges extend beyond exclusive travel benefits to offer premium lifestyle benefits as well.

The Jet Airways ICICI Bank Credit Cards will be available in three premium variants – Sapphiro, Rubyx and Coral in partnership with American Express and Visa. Customers will have the option to apply for a standalone American Express or Visa Credit Card or enjoy the benefits of applying for both cards with a single application. The Jet Airways ICICI Bank Credit Cards' unique features allow customers to convert their everyday purchases into flight awards, while enjoying an array of exclusive privileges and world class services.

The Jet Airways ICICI Bank Credit Cards will be available under an attractive pre-booking offer of up to 5000 JP Miles valid until September30, 2012.

The Jet Airways American Express Cards from ICICI Bank offer an unsurpassed earn rate of up to 7 JPMiles for every Rs.100 spent, making this the most rewarding card for frequent flyers in India. In addition, from now to October 31, 2013 customers will earn an additional 2 JPMiles per Rs 100 spent on the Rubyx and Sapphiro variants and 1 JPMile per Rs 100 spent on the Coral variant.

The Visa Chip Credit Cards will provide enhanced security, wealth of luxury benefits and unrivalled global acceptance.

The Jet Airways ICICI Bank Credit Cards, depending on the card variant, offer the following attractive benefits to card members:

• Up to 7 JPMiles per Rs 100 spent on all spends on the Jet Airways - American Express Cards issued by ICICI Bank. As a promotional offer from now until 31st October 2013, customers will earn up to 9 JPMiles per Rs 100 spent on all spends
• Up to 10,000 JP Miles on joining. Up to an additional 5,000 JPMiles if customers pre-book their Jet Airways ICICI Bank Credit Cards
• One complimentary Jet Airways economy class base fare waived off ticket on joining and every year thereafter
• 5% discount for bookings on the Jet Airways website, excess baggage allowance and dedicated check-in
• Complimentary access to Altitude Lounges at Mumbai and Delhi airports with your Jet Airways American Express Card issued by ICICI Bank
• Complimentary airport lounge access at Visa affiliated Lounges
• Buy one get one on movie tickets, complimentary golf rounds at 9 premier golf courses in India and complimentary fraud insurance cover courtesy the ‘ICICI Bank Credit Cards Experience' programme
• Minimum savings of 15% on dining bills across 800 restaurants in 11 cities in India courtesy ICICI Bank Culinary Treats
• Enhanced security against fraud with embedded microchip technology for Jet Airways ICICI Bank Visa Credit Cards

The card will be complimentary for JetPrivilege Platinum members.