Controversial circular withdrawn for charge for settling credit card dues with cheques, cash

The Finance Ministry has withdrawn a ‘controversial circular’ that asked all public sector banks to emulate HDFC Bank and charge a processing fee on cash or cheque payments received for credit card dues.

In a letter to the chief executives of public sector banks on March 14, the Under Secretary in the Department of Financial Services, D. D.

Maheshwari, said that “the October 25, 2012, circular stands withdrawn with immediate effect, following direction by the Secretary (Financial Services)’’.

Mr. Maheshwari, had, on October 25, 2012, stated that in view of the host of benefits available to all the stakeholders and to also bring down the cost of banking services, the government and the RBI had taken various initiatives for promotion of electronic mode for bank transactions. The letter further stated that, to encourage bank customers to use electronic means for banking transactions and to discourage use of physical/cash mode of transactions, all PSU banks are urged to consider charging processing fee on customers paying credit card dues either in cash or through cheque.

http://www.thehindu.com/business/Industry/no-charge-for-settling-credit-card-dues-with-cheques-cash/article4526387.ece

Unsecured Lending Rise in Gloomy Credit Scene

Unsecured retail lending products, including personal loans and credit cards, are seeing a healthy uptick in disbursals even as the the overall credit environment in the country remains sluggish. Analysts say that with corporate loan growth slowing in a constrained economic environment, banks are increasing focussing on other segments like unsecured loans to grow their loan books.

The Reserve Bank of India (RBI) data show that the disbursements of unsecured lending products grew by 20.35% to Rs 1.84 lakh crore between March 23, 2012, and January 25, 2013. The corresponding growth levels for other loan segments, which have a larger base, was considerably lower. For instance, the loan growth for industries grew by 8.3% to Rs 21.3 lakh crore, agriculture by 6.8% to Rs 5.58 lakh crore and home loans by 10.4% to Rs 4.45 lakh crore. Some other retail loan segments like consumer durables and services sector loans like shipping saw negative growth during the corresponding period.

At the end of the December 2012 quarter, private lender Axis Bank recorded a 86% year-on-year (y-o-y) growth in its unsecured portfolio to Rs 4,326.12 crore. Another private bank, HDFC Bank, saw a growth of 37% y-o-y to R26,820 crore in the same period.

However, public sector banks have seen moderate growth in the segment with State Bank of India recording just 8.3% y-o-y growth in the 'Other Retail' lending segment (which includes unsecured loans) to Rs 68,814 crore. Union Bank of India saw a 9.7% y-o-y growth in its unsecured portfolio to Rs 616 crore. Unsecured retail products are not backed by collaterals and are given on the basis of the credit history of the borrower. Bankers say that people generally avail unsecured loans to meet personal expenses like wedding or hospitalisation. The interest rate on these loans is often higher than secured or collateralised loans. The unsecured loan segment saw huge defaults in the aftermath of the 2008 financial crisis and banks including ICICI Bank and HSBC consequently reduced their focus on the business. However bankers insist that they have learned lessons from the past and have now put in more robust systems to prevent such eventualities. Apart from greater due diligence, banks have begun using credit bureaus more extensively by sharing data about delinquents with them.

Aditya Puri, MD&CEO of HDFC Bank, said that it does not matter if the loans are secured or unsecured as long as you choose your customer prudently. “The problem arises when banks start lending to sub-prime borrowers who do not have the capacity to repay the loans,” he said. Jairam Sridharan, head of consumer lending & payments at Axis Bank, said, “The unsecured book we will expand, but will keep focus on risk management. Its a very profitable business and addresses core needs – unstructured needs for money at unforeseen times,” he said.

However ICICI Bank till date remains selective in the segment. An ICICI Bank spokesperson said, “Unsecured retail products (personal loans and credit cards) account for only about 1% of the Bank's total advances. ICICI Bank is offering these products on a selective basis to limited customer segments, primarily focused on cross sell to existing customers of the Bank”. At the end of the December 2012 quarter the unsecured loan portfolio of the bank saw a 10% y-o-y dip to Rs 3,088 crore.

A Union Bank executive said the public sector banks generally do not push their unsecured retail products too aggressively owing to the risks associated with the segment. “We only offer personal loans to our existing trusted customers. Learning from the 2008 experience we have decided not to aggressively acquire new customers for unsecured lending products,” he said.

Credit Card Fraud Prevention Measures

The number of credit card holders who have become victims of cyber frauds has risen exponentially. In the recent past, electronic payment systems have become vulnerable to new types of misuse. The Reserve Bank of India (RBI) in February asked banks to put in place certain security and risk measures. The apex bank released new guidelines to make payment through credit or debit card more secure. According to RBI data, the number of credit card frauds rose to 1,590 in the quarter ended 31 December amounting to Rs.9.49 crore compared with 1,327 cases amounting to Rs.4.93 crore in the preceding three months.

Here are the five things that you need to ask your banker before accepting the card that they offer.

Zero-liability policy

Most banks offer zero-liability policy on credit cards. However, the cover will vary from bank to bank. “We’ve zero liability for credit cards. Any fraudulent transaction after reporting loss of card will be covered. Customers need to inform immediately on the loss of card,” says Rajesh Kumar, senior executive vice-president, retail credit and risk, HDFC Bank Ltd. Once you know that you will get zero-liability, ask if it is covered for stolen card or any kind of fraudulent activity. “In the US and most of the markets, zero-liability is mandated by the regulator. In India, though zero-liability is provided but still all facilities are not available as nobody is ready to pay a fee,” says Nayak. Ascertain the number and amount of fraudulent transactions covered. Some banks cover transactions within five days prior to reporting whereas some do for three days. Some banks cover unlimited amount of transaction while others have a cap of Rs.10,000. A few banks ask you to pay the first Rs.5,000 lost and the rest is covered by them. So, there are multiple schemes available. The process of claim also varies from bank to bank. In case of any loss or fraud, your bank may ask you to give it in writing that you haven’t done it. Some may record your phone call.

Chip-based card

RBI has asked all banks to provide chip-based cards if the card is used in a foreign land at least once. “Chip-based card is more secure as it is difficult to copy data from it compared with a magnetic-strip card,” says A.P. Hota, managing director and chief executive officer, National Payments Corp. of India. This is true only for swipe purchase and not when you purchase online. However, there have been reports that chip-based cards also have been compromised. “This happens when the terminal set at a merchant outlet can read only magnetic-stripe cards (chip-based cards do have magnetic strip as of now). The terminal will use the magnetic strip to read the card. Now in case a fraudulent activity happens, the liability will fall on the bank through whose terminal the activity happened. So customer or the chip-based issuing bank is protected,” says Nayak.

As you have taken protection by opting for a chip-based card, the liability of fraudulent activity will not fall on you.

Factors of authentication

RBI has stated that banks should move towards a system that facilitates implementation of additional factor of authentication for cards. Multi-factor authentication is considered to be safer as the bank will also send a one-time password to your mobile phone and you can transact only if you key in the code that has been sent to you. However, some banks still don’t have this. For instance, HDFC Bank Ltd does not offer multi-factor authentication on all cards. Citibank gives you an option of multi-factor authentication or do a direct transaction. Axis Bank Ltd has put in place multi-factor authentication.

Blocking the card

In case of loss of card or fraudulent activity, the first thing that you should do is to block the card. All banks that offer credit cards provide the facility to block the card by calling the customer care helpline. But what happens if you are abroad or unable to contact the customer care? “HDFC credit card can be blocked through Internet banking. You can anyway call the customer care too,” says Kumar. RBI has stated that banks should provide easier methods such as text message to the customer for blocking card and get a confirmation to that effect after blocking the card.

Suspicious transaction

RBI has also asked banks to frame rules based on the transaction pattern of the usage of cards by the customers in coordination with the authorized card payment networks for preventing fraud. Simply put, in case a bank sees a transaction happening in a geographical region which is unusual for the customer, they call the customer to validate whether he/she wants to do the transaction. American Express, based on the customer behaviour, calls the card user if they find any suspicious behaviour and also for big-ticket purchases.

Conclusion: There are other facilities such as buying an insurance policy, temporary credit which bank gives in case of fraudulent activity and provisional credit in case of dispute. 

http://www.livemint.com/Money/JJFbYpXzIiAVYmHomEqChJ/5-things-you-need-in-a-secure-credit-card.html

ICICI Bank, HSBC starts expanding credit card base

After a gap of almost four years, ICICI Bank and Hong Kong and Shanghai Banking Corporation (HSBC) have started expanding their credit card base. The duo, once the most aggressive credit card players in the country, have not been growing this business since 2008-09 as uncertain economic environment increased the risk of delinquencies. It appears that the two banks are now convinced that increasing their credit card portfolios will not lead to significant erosion in asset quality.

For ICICI Bank, the number of outstanding credit cards at the end of January, 2013 was 2.84 million compared to 2.82 million in December, 2012 and 2.77 million in November, 2012. HSBC's credit card base in India increased to 502,757 at the end of January, 2013 from 501,631 and 501,229 in the previous two months.

"ICICI Bank has been among the leading banks in the credit and debit card business. With the new 'Gemstone' collection of credit cards, the bank offers a compelling product proposition to all segments of credit card customers. The bank has increased its focus on cross-selling of credit cards to its existing customers and most of the growth in card numbers is being generated from this segment. The bank continues to build a portfolio with a strong focus on credit quality," the bank said. "We continue to grow our credit card business in a cautious and calibrated manner," an official of HSBC in India said. ICICI Bank did not respond to the mail sent by Business Standard.

The credit card base of ICICI Bank and HSBC have been declining every month between April, 2011 and October, 2012 the Reserve Bank of India's (RBI) data showed. While the data for the previous period was not immediately available, according to bankers both the banks' credit card portfolios have been shrinking month-on-month since 2008-09 due to rise in delinquency rate. Both ICICI Bank and HSBC had earlier said that they were consciously trimming their credit card portfolios to cut losses. However, the formation of credit information bureaus has allowed banks to get information on borrowers' credit history. "The quality of credit bureaus in India has improved significantly. Banks' can underwrite customers far more intelligently than ever before. Also, I don't think any bank will commit the same mistakes they made last time. The growth now is going to be measured and researched, without compromising the credit quality," a senior executive in charge of retail banking business of a foreign bank in India said.

HDFC Bank continues to remain the largest player in the Indian credit card market with a base of 6.26 million cards at the end of January, 2013. ICICI Bank occupies the second position followed by State Bank of India (SBI), Citibank and Standard Chartered Bank.

	Number ofoutstanding credit cards
Month	ICICI Bank	HSBC
January 2013	2,840,802	502,757
Decemberr 2012	2,824,532	501,631
November 2012	2,771,657	501,229
October 2012	2,806,743	501,378
September 2012	2,793,705	500,835
August 2012	2,799,271	506,863
July 2012	2,802,935	572,392
June 2012	2,821,023	579,186
May 2012	2,822,328	602,853
April 2012	2,833,357	613,877
March 2012	2,844,705	736,764
February2012	2,860,560	745,899
January2012	2,868,629	762,597
December 2011	2,892,502	766,835
November 2011	2,956,176	779,423
October 201	2,996,874	787,720
September 2011	3,025,176	789,268
August 2011	3,038,046	793,204
July 2011	3,120,228	865,697
June 2011	3,194,674	887,625
May 2011	3,266,549	899,323
April 2011	3,361,684	910,559

http://www.business-standard.com/article/finance/icici-bank-hsbc-starts-expanding-credit-card-base-113032500245_1.html

Car sales slump: of credit card, assured buyback and discount deals

Car sales are nose-diving and in February they have has hit a 12-year low, due to poor consumer interest, which has been attributed to a slowing economy, rising inflation and high interest rates. Meanwhile, auto companies are desperately trying all means to get their bottom line in order. This has is resulted in an avalanche of offers. Here are four types of offers available as of now.

1. Credit Cards: Tata Motors is currently running on offer on its smallest car Nano. If you have a credit card, you can simply swipe the card at a dealer and drive out with a Nano car. The offer is available on Nano special edition and the offer is valid up to March 31. This zero percent EMI offer is available for credit cards of select banks such as ICICI Bank, Axis Bank, Standard Chartered Bank, Kotak Mahindra Bank and HSBC. You get a 3/6/9/12 EMI options to pay the amount. The amount is the road price amount which includes car price, insurance as well as RTO charges and the like.

2. Old car exchange and Rs 1 offer: This offer is available on the Vento sedan, from Volkswagen. You can exchange your old car for a Vento sedan, and pay Rs 1 as down payment. After one year, you get to pay the difference amount. Keep in mind here that you get the deferred payment option only if the value of the exchanged car is half the value of the Vento. The Vento is in the price range of Rs 7 lakh to Rs 10 lakh. This means to avail of the facility, your old wheels should be worth at least Rs 3.5 lakh.

3. Assured buyback: Yet again an offer from Tata Motors, where they offer a buyback assurance on its new Manza car. You can get 60 percent resale value after three years. Of course, there are a few conditions that apply to the offer. A Tata auto dealer told Firstpost, that resale value is on the ex-showroom price and not on the on-road price. Also, the car should be a single owner car, without any accident record and must be driven not more than 1 lakh kilometres. Also, to qualify for the assured buyback offer, the car should not have any hypothecation, or simply put no loan running on it. And the car can be exchanged to buy the next car from Tata Motors.

4. Savings offers: Hyundai is running a Magic March offer, wherein the company is offering savings on various car models. The savings are in the range of Rs 15, 000 to Rs 44,500. For instance, the i10 model has a savings offer of around Rs 42,500 while the Santro come with a savings of around Rs 26,350. Other companies such as Mahindra & Mahindra, General Motors and Toyota are also running various discount offers across segments.

So, there are deals and offers, but only time will tell if they give the necessary kick to the sleepy car sales. Should you go for these offers? If you have the funds, there’s nothing wrong in checking out the deals. But, if you don’t have the funds as of now, you might just want to wait and watch the interest rates movement. The RBI is about to review its monetary policy next week.

http://www.firstpost.com/investing/car-sales-slump-of-credit-card-assured-buyback-and-discount-deals-658604.html

HSBC Canada to sell its credit card portfolio business

HSBC Bank Canada said it would sell its private label credit card portfolio to a wholly owned subsidiary of Toronto-Dominion Bank as it accelerates the wind-down of its consumer finance business.

The portfolio was worth about C$495 million ($485.70 million) as of Feb. 28, HSBC Canada said in a statement, without disclosing the sale price.

The sale of HSBC Retail Services Ltd to TD Financing Services Inc is expected to be completed in the third quarter of 2013, the company said.

For banks, credit card biz is on the upturn

Amid significant reduction in defaults and focus on income-based lending, banks are seeing their credit cardbusiness grow at a healthy rate. Credit card loans saw a year-on-year growth of 24.3 per cent as at January-end 2013 against 8.5 per cent January-end 2012. In absolute terms, credit card loans stood at Rs 25,200 crore as at January-end 2013 against Rs 20,300 crore in the year-ago period, according to Reserve Bank of India data.

The credit card business had declined substantially post 2008-09 in the wake of the global financial crisis and most banks’ credit card loans witnessed a de-growth due to rising delinquencies.

According to Romesh Sobti, Managing Director and CEO, IndusInd Bank, there was a phase of reckless growth in credit cards about 7-8 years ago where the basics of income-based lending were ignored and lot of surrogates came into play. “Thereafter, there was a period of consolidation and, therefore, banks closed down many accounts due to delinquencies, huge write-offs and the market was washed out,” he said. IndusInd Bank had acquired Deutsche Bank’s credit card business for over Rs 224 crore in 2011 with about 1.35 lakh cards outstanding. As on January 2013, the mid-sized private lender had about 2.2 lakh cards outstanding.

Better income-based lending and access to credit information bureaus are helping banks grow their credit cards business. Credit cards will be very profitable for banks over the next five years. Paresh Sukthankar, Executive Director, HDFC Bank, said focus on internal customer base in the credit card portfolio has helped the bank reduce defaults. “The problems in the portfolio (credit card) were resolved more than a year back. It is very much a profitable portfolio now and banks are coming back into the business,” he said. HDFC Bank, the largest credit card issuer, had 6.2 million cards in circulation as on January-end 2013 against 5.5 million in the year-ago period. The bank has an outstanding portfolio of about Rs 10,000 crore.

http://www.thehindubusinessline.com/industry-and-economy/banking/for-banks-credit-card-biz-is-on-the-upturn/article4538672.ece?ref=wl_industry-and-economy

CIBIL TransUnion Score 2.0 Interpretation

Singapore telecoms: Retail revolution

Take-up of smartphones is driving the growth of mobile commerce in Singapore. So, too, are company innovations.

Singapore is emerging as one of the world’s fastest-growing markets for online commerce. That is unsurprising, given that Singapore is one of the most connected countries in Asia and indeed the world. More remarkable, though, is the rapid growth in m-commerce (via mobile phones), which now accounts for nearly a quarter of Singapore's online sales. As a result, online payment firm PayPal is just one of the companies using Singapore as a location to test out new m-commerce technologies.

Singapore boasts excellent telecoms infrastructure, with a wireless broadband penetration rate of 162%, and a mobile penetration rate of 150% in October 2012, according to government figures. A study called Online and Mobile Shopping Insights 2011, released in May 2012 by PayPal and research company Nielsen, put total online spending in Singapore at S$1.4bn (US$1.1bn), up by 33% on 2010. The total number of online shoppers grew by 50%, to 1.8m shoppers. With little sign of growth slowing, the report predicted that the market will expand to S$4.4bn by 2015.

Airline tickets, fashion, financial services, travel packages and books were the top five online spending categories. But the online market for groceries is also booming, given the convenience of home delivery. According to PayPal, Singaporeans spent three times more on this category in the first eight months of 2011 than in the whole of 2010, focusing on bulky essentials such as rice, milk powder and diapers, and mineral water. Virtual retailers such as household.sg, thebutcher.com.sg and supernature.com.sg are benefiting as well as supermarket chains like FairPrice, Cold Storage and Carrefour.

But it is the m-commerce market that is proving particularly buoyant, driven by the proliferation of mobile phones. According to the Mobile Marketing Association of Singapore, there were 7.8m mobile phones in Singapore in late 2012, while 90% of the population owns a smartphone. Little surprise, then, that PayPal/Neilsen’s study reported that Singapore’s m-commerce market grew by an eye-popping 660% in 2011, to S$328m. It also forecast that the m-commerce market will grow ten-fold by 2015, to S$3.1bn.

That means that m-commerce's share in all online shopping will grow from 23% in 2011 to over 70% in 2015. That is up from just 4% in 2010, while mobile shoppers made up 48% of all online shoppers in 2011 compared to 29% in 2010. The majority (75%) of purchases made using mobile devices were via smartphones. However, the average spend per head by shoppers using tablets was much higher than that of shoppers using smartphones, at S$380 against S$274.

The top m-commerce spending categories were fashion and accessories, movie tickets, books, applications and food and groceries, with travel bookings much more commonly made online. But a good chunk of the mobile shoppers said they wanted to buy airline tickets using their smartphones, while tablet users said they would like to buy higher-value items like automotive goods and computer hardware. Moreover, consumers aren't just using their phones while on the move: according to Forrester, 40% of Singaporeans use their mobile to shop at home, while 18% shop via mobile at the office.

Taking advantage

Singapore's rapid take-up of m-commerce has attracted investment from local, regional and global companies eager to use the city-state to experiment with new technologies. Asian women’s clothing retailer Qoo10 reported that by mid-October 2012, Singapore was its fastest-growing market, contributing 37% of its US$15m in mobile sales across the Asia-Pacific region. The retailer launched a Qoo10 mobile application a year earlier, and reports that Singapore accounted for 64% of the 700,000 downloads in the region. That means that every fifth Singaporean woman had downloaded the application.

Several new online retailers, such as Home24.sg, Clozette and Zalora have also emerged, with business models based on bringing together suppliers. Home24.sg, which opened in mid-2012, works with local furniture and home product suppliers to present their products on its site. Clozette, which opened in mid-2011, promote about 100 suppliers of clothes, shoes and jewellery, this time by redirecting users to their websites. It also uses social media techniques to develop a user community.

Others, like Emall.sg and Livejournal, use blogshops, while daily deal sites such as AllDealsAsia are also expanding. Intense competition has reduced the number of bulk-buying companies from 72 in 2010 to around 19 at present, but the survivors - including Groupon Singapore – are reporting impressive growth.

Singapore’s government is also encouraging the industry's growth. The Infocomm Development Authority of Singapore's Digital Concierge is helping to standardise the development of mobile applications so that businesses can create them more easily, adding in their own custom features. Singapore is also running a pilot project that will allow shoppers who are not often at home to collect their goods from lockers by keying in a code they receive from the retailer.

PayPal is also doing its bit to facilitate growth, not least by helping businesses to convert their online shopping websites to more mobile-friendly ones. The company's study found that nearly two-thirds of mobile shoppers in Singapore have encountered problems using a small screen, for example when entering 16-digit credit card numbers.

In response, PayPal launched two new m-commerce products in 2012. One automatically redirects mobile shoppers to a mobile-optimised payment page during checkout. The other allows merchants to convert their site into a mobile-optimised one. These are the kind of simple innovations that should keep Singapore at the forefront of m-commerce development.

Banks take steps to make credit card payments more safe

In view of the rampant rise in credit card frauds, banks and merchant establishments are upgrading their security measures to make electronic payment transactions more secure. Among the big credit card players, HDFC Bank and ICICI Bank have started issuing chip-based EMV (Europay, MasterCard and Visa) cards. Further, they are also employing real time fraud control tools such as second factor authentication and sending SMS and email alerts regarding card-based transactions. This comes even as the Reserve Bank of India on Thursday issued guidelines for card issuers to only issue cards with an embedded chip and a compulsory pin (like that used for ATM transactions) from July.

Skimming, phishing

Aditya Puri, Managing Director, HDFC Bank, recently said that frauds such as skimming and phishing are an industry-wide phenomenon and, being a part of the ecosystem, the bank has also witnessed such instances. Skimming is the illegal copying of information from the magnetic strip of a credit card. Phishing refers to emails or SMSes that trick people into giving out their personal and banking information. “We are replacing PoS (Point of Sale) machines at some merchants where skimming has happened,” said Parag Rao, Senior Executive Vice-President, HDFC Bank. HDFC Bank currently has about 2.5 lakh PoS terminals across the country and is one of the largest players in the merchant acquisition space as well. Rao, however, did not share information pertaining to the number of fraud cases detected.

HDFC Bank has over 6.4 million credit cards in circulation with an outstanding portfolio of Rs 10,000 crore and 35 per cent market share. ICICI Bank has been issuing chip-enabled cards to all its new Visa and MasterCard customers for the past few months. “Our bank is also giving existing cardholders an option to convert their magnetic cards to chip-based cards when they are due for renewal or can request the bank for replacement,” said a bank spokesperson. ICICI Bank, the second largest credit card player, has about 2.8 million credit cards with a market share of about 15 per cent as on December 2012. Uttam Nayak, Visa Group Country Manager, India & South Asia, said: “About 10-12 banks are currently issuing EMV cards. Phishing has caused the majority of the frauds in the past few months. Hence, banks are also compelled to innovate and upgrade their systems. Getting EMV terminals and using only encrypted data are the global practices that we are promoting now.”

Calling UP customers

Banks are also proactively calling up customers, when they return home from high risk countries, to replace their existing cards with chip-enabled cards to prevent any misuse. Jean Pascal Duvet, Chief Executive Officer, Atos Worldline India, said there has been about 40 per cent rise in the number of fraud incidents in the last one year and the trend is expected to continue.” Atos Worldline is an end-to-end service provider for critical electronic transactions. Credit card company American Express last week launched a service ‘ezeClick’ which will enable its customers to complete online transactions without entering card details, thereby simplifying the transaction process with just a single user ID. Start-up firm OneAssist Consumer Solutions is providing a 24x7 helpline whereby customers can block their cards and mobiles instantly. “If you lose your wallet that has all your cards, one phone call to us will help you block all further transactions. Further, customers can also recover all data, including pin numbers, stored in their lost mobile phone,” said Gagan Maini, Co-founder and Director, OneAssist, which has also tied-up with HDFC Bank.

Most vulnerable

According to a KPMG report on frauds, financial services were the most vulnerable to frauds. About 37 per cent of organisations identified password sharing as the primary cause for identity theft. A common type of identity theft involves creating clones of original Web sites that are then used to attack payments and online credit card processing systems to launder money. Proactively, banks and merchants are also focusing on consumer education. Customers are being advised against sharing card details, storing pin numbers or passwords in wallets or phones, and setting simple passwords. They must also change passwords and pin numbers regularly and avoid using public devices like those in cyber cafes.

http://www.thehindubusinessline.com/industry-and-economy/banking/banks-take-steps-to-make-credit-card-payments-more-safe/article4466130.ece?homepage=true&ref=wl_home

Citibank China vows to boost local credit card business

Citigroup Inc, the New York-based financial giant, will make development of its credit business a top priority in the Chinese market this year. Andrew Au, CEO of Citi (China) Co Ltd, said on Thursday that the performance of Citibank's credit card business, which was kicked off in September, has been "satisfactory", and the lender will continue its investment in the sector.  Simon Chow, head of Citi China's consumer banking unit, said this year it will open two credit card sales centers - in Chengdu, Sichuan province, and Hangzhou, Zhejiang province - while developing one or two new types of cards.  "The credit card business has been growing at a faster-than-expected pace, and we will put more staff into it," he said. 

Chow said the bank expects to establish broad strategic partnerships with merchants and improve customer service this year. He said that Citi also plans to start working with some major online payment companies, but declined to elaborate. The recent central government move to reduce the interchange fee - the sum that merchants pay to banks and credit card processors for accepting credit cards - will hit the market greatly, but won't hurt Citi as much as its Chinese counterparts, Chow said.

"We focused on merchants such as hotels, traveling and shopping businesses, which would be less affected than the wholesale sector. In addition, a large percentage of purchases made by our credit cards take place abroad, and overseas interchange fees are usually triple the fees in China," he said. On Monday, banks in China started to implement new standards of interchange fees set by the National Development and Reform Commission.  The new rules will cut the fees by 20 percent and reduce income to lenders by 7.5 billion yuan ($1.2 billion), the central bank said. Chow said Citi's emphasis on its credit card business comes from the still-limited network in the economy, as well as Citi's possible cross-selling opportunities for other products such as insurance and unsecured loans. 

"We still believe the returns from issuing credit cards will exceed the investment," Chow said. "Due to current policies, we could only establish as many as 26 outlets in China a year, but credit cards could bring more clients by combining our advantage of a good network channel. It is key to our consumer banking strategy."  The bank has also applied to be in the first batch of foreign lenders allowed to sell local mutual funds, and it expects to explore combined products that sell both domestic and overseas funds.  The largest credit card issuer in the Asia-Pacific region said the Chinese market will become the world's largest for credit cards within the next decade. "Normally, the credit card business will break even in four to five years. I expect our exploration in China could surpass such a pace," Chow said. 

According to the central bank, China's purchases with bank cards was 20.8 trillion yuan in 2012. Credit card lending stood at 3.5 trillion yuan during the same period, which 1.1 trillion yuan was unpaid. 

Citi was the first international bank to issue its own solely branded credit card in the Chinese mainland. The launch marked a "milestone" for Citi's presence in China, Au said. He said Citi China's performance last year was better than that overall by foreign banks, and its headcount has increased compared with a year earlier. Citi announced in December it will slash 11,000 jobs globally, or 4 percent of its total workforce, to trim costs. About 6,200 jobs will come from Citi's consumer banking unit.

http://www.chinadaily.com.cn/cndy/2013-03/01/content_16265687.htm

Credit card frauds amounts to Rs 948.64 lakh in Dec quarter: Govt

The number of credit card frauds rose to 1,590 in the quarter ended December 2012 involving an amount of Rs 948.64 lakh, Parliament was informed today.

"As per information furnished by Reserve Bank of India there were 1,590 cases of credit card frauds involving an amount of Rs 948.64 lakh during the quarter ended December 2012 as compared to 1,327 cases involving an amount of Rs 492.98 lakh in the quarter ended September 2012," Minister of State for Finance Namo Narain Meena said in a written reply to Rajya Sabha.

He said RBI has taken various measures to prevent such frauds and has issued various guidelines from time to time. RBI has advised banks to set up internal control systems to combat frauds, take pro-active measures, ensure credit card operations are safe, sound and profitable, preventive measures to combat frauds relating to skimming or duplication of cards. Also, RBI has asked banks move to secure Card Not Present (CNP) transactions, making it mandatory for banks to put in place additional authentication/validation. "RBI has issued guidelines which are fundamentally expected to enhance safety, security, efficiency in banking processes relating to benefits for banks and their customers. The implementation progress is required to be reviewed and report submitted to the Board on quarterly basis," Meena said.

In reply to a separate question, the Minister said the gross non-performing assets (NPAs) of the public sector banks (PSBs) has increased from Rs 71,080 crore as on March 2011 to Rs 1,12,489 crore as on March 2012. As on December 2012, gross NPA (GNPA) ratio stood at 3.69 per cent, GNPA ratio in agriculture at 5.20 per cent, GNPA ratio in retail loans at 2.73 per cent and GNPA ratio in corporate lending stood at 3.41 per cent. In December 2012, the gross NPAs of the public banks rose to Rs 1,55,839 crore.

Government has asked banks to increase the pace of recovery and manage NPAs, put in place early warning system, replace post dated cheque system with Electronic Clearance System, review NPA accouts of Rs one crore and above by Board of Directors and top 300 NPA accounts by Management Committee. "Parliament has recently enacted The Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Act, 2012 for removing of certain bottlenecks in the recovery of bad debts. The Amendment Act has come to force from January, 15, 2013," he said. He further said steps taken by government and RBI have resulted in improvement of recovery of NPAs. The recovery of NPA by PSBs has increased from Rs 9,726 crore (March 2010) to Rs 13,940 crore (March 2011), Rs 17,043 crore (March 2012) and Rs 10,815 crore (September 2012).

http://www.financialexpress.com/news/credit-card-frauds-amounts-to-rs-948.64-lakh-in-dec-quarter-govt/1083433/2

Buy a Tata Nano, with a swipe of a credit card

In a first of its kind deal in the Indian automobile industry, Tata Motors on Wednesday in a bid to jumpstart flagging sales of Tata Nano has offered customers an option to swipe their credit card and drive out with the Tata Nano on the same day. Ranjit Yadav, president, Passenger Vehicles Business Unit, Tata Motors said: "This offer will enable customers to own a car in the fastest and hassle free manner. With the introduction of this offer, consumers get the benefit of converting the entire amount on the credit card into interest free installment, spread over a period of 12 months and manage monthly cash flow better."

When Yadav, a recent hire at Tata Motors joined India's largest automobile firm from Samsung India- the South Korean consumer electronic major's Indian subsidiary in September 2012, it was speculated that the automobile industry that lacks innovative methods to sell products could take a leaf from the fast moving consumer electronics business. This is precisely what Yadav, the former country head at Samsung (India) for the Mobile & IT Businesses brought to the table, by offering an option to customers to buy a vehicle through a credit card, the same way a mobile phone or a lap top is bought.

Tata Motors made an offer wherein customers can convert the entire amount in monthly instalments of 0% over a period of 12 months at an EMI of Rs.8,333 per lakh. Tata Nano has partnered with five banks for this special scheme -- Axis Bank, HSBC Bank, ICICI Bank, Kotak Mahindra Bank and Standard Chartered Bank. Customers in India, who have credit cards belonging to these banks can avail of this special scheme in 26 cities, across 75 Tata Motors Dealerships.

The latest initiative to prod customers to buy the micro-car assumes significance as sales of Tata Nano and other car models of the automobile major plunged 62% in February. Production at the Sanand plant in Gujarat was cut by almost 80%, as inventory of Tata Nano piled up at dealerships and stockyards. For Tata Motors, the latest initiative is critical as several finance schemes and offers for Tata Nano has come a cropper. The sales of the micro-car has fallen 7.29% in April to January of this fiscal year 2013 to 50,836 units versus 54,835 units. From the highs of 9,000 to 10,000 units a month, the average monthly sales of Nano has come down to 1,500 to 2,000 in December2012 and January 2013. While Tata Motors felt the brunt of the upheaval in the market, the other car makers have also felt the pinch.With discounts not doing the trick, innovative finance schemes and buyback offers have come to the fore to lure people to buy their dream cars.

German car maker, Volkswagen is offering a bouquet of schemes on its Vento sedan. A prospective Vento customer can trade in his old car for a new Vento sedan by just paying Re 1 and not paying anything for the first year and pay the balance a year later in full or as 36 EMIs. The company also gives the customer an option to pay 50% of the car price in the first year and the balance money after one year. Its not car makers alone, but even the dealers are chipping in with freebies. In Gujarat a Skoda dealer has come out with a scheme for customers, wherein a customer can buy a sedan Skoda Rapid, and he/she gets a Fabia hatchback free after five years.

RBI prescribes $500 limit on international cards to check fraud

The Reserve Bank of India (RBI) has prescribed a threshold limit of $500 for all new international cards – both credit and debit - in a bid to check frauds. RBI has also asked banks to refrain from issuing cards with global access unless specifically sought by the customer.

''All the active Magstripe (magnetic stripe) international cards issued by banks should have threshold limit for international usage.  The threshold should be determined by the banks based on the risk profile of the customer and accepted by the customer (by June 30, 2013),'' RBI said in a notification issued on Thursday.

''Till such time this process is completed an omnibus threshold limit (say, not exceeding USD 500) as determined by each bank may be put in place for all debit cards and all credit cards that have not been used for international transactions in the past'', it added.

RBI's directive comes in the backdrop of cyber-attacks becoming more unpredictable and electronic payment systems becoming vulnerable to new types of misuse. RBI said such steps are imperative for banks to minimise the impact of such attacks and to arrest or minimise the damage.

RBI has advised banks to make sure that all new debit and credit cards are issued only for domestic usage unless international use is specifically sought by the customer. Such cards enabling international usage will have to be essentially EMV Chip and Pin enabled. (By 30 June 2013) The issuing banks should convert all existing MagStripe cards to EMV Chip card for all customers who have used their cards internationally at least once (e- commerce/ATM/POS).

Banks should ensure that the terminals installed at the merchants for capturing card payments (including the double swipe terminals used) should be certified for both payment and data security. As a preventive measure, RBI said, bank should frame rules based on the transaction pattern of the usage of cards by the customers in coordination with the authorised card payment networks for arresting fraud. RBI has directed banks to move towards real time fraud monitoring system like alerting customers via SMS at the earliest, so that such transactions can be averted. Also RBI has advised advised banks to move towards a system that facilitates implementation of additional factor of authentication for cards issued in India and used internationally (transactions acquired by banks located abroad)