HDFC Bank raises rate on credit cards amid slump

HDFC Bankwill charge 3.25% interest rate on credit cards from October, up from the current 3.05% and 3.15%, besides going slow on sourcing new customers in a tough macroeconomic environment.

"On certain cards, we were charging lower interest rates than the rest of the industry. Hence we have brought the rates on a par with the industry," said a senior official of HDFC Bank, India's leading issuer of credit cards and the country's second-largest private sector bank. The bank has reduced its monthly sourcing of new customers from a peak of 100,000 to 65,000-70,000, the official added.

At June-end, HDFC Bank had a portfolio of 5.94 million credit cards, down from 6.56 million in May. Yet, it retained its position as the leading issuer of credit cards in the country, ahead of its rivals, including ICICI Bank, Citibank and Axis Bank.

"We decided to reduce the number of inactive cards. This is an ongoing process where banks churn their portfolio. We are being prudent and cherry-picking customers.  We continue to source good credit and get market share among the high net worth customers," said the official, who did not wish to be named, adding that the bank's portfolio was skewed towards middle and upper income individuals. Most banks began shrinking their credit card portfolio in late 2008 after customers started defaulting on payments in the wake of the global credit crisis. "There is a slowdown in the economy. This could lead to job losses in some sectors.  However, there is no evidence of it so far. In the medium term, there is a chance that credit card spends and outstanding on cards go up. We have to be watchful of the unsecured lending book," said the bank official.

The percentage of non-performing assets in the credit card portfolio of banks in the country almost tripled to 15-20% in 2009-10 from 5-8% in 2008-09. However, defaults are now down to below 5%. After the 2008 crisis, Deutsche Bank, Royal Bank of Scotland and Barclays exited the credit card business

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/hdfc-bank-raises-rate-on-credit-cards-amid-slump/articleshow/23068641.cms

RBI ends 0% interest rate schemes for purchases through credit card

The Reserve Bank of India on Wednesday told banks to withdraw zero per cent interest rate schemes for purchase of consumer goods through credit cards, a move aimed at protecting consumers, but something that's likely to dampen the festive buying.

ET, in its September 24 edition, had flagged off this issue. RBI has made the circular public on Wednesday, which was earlier kept 'confidential'. The central bank has also told banks to divulge the details of benefits they get from retailers for offering interest rate discounts on loans provided to buy consumer goods.

"You are advised to strictly desist from these practices henceforth," RBI said in a circular issued on September 17 to all bank chief executives. It said banks should not resort to any practice that would distort the interest rate structure of a product as this vitiates the pricing mechanism.

The central bank dubbed these as "pernicious practices of select banks deterring customer protection". It went on to add that these practices breach fair and transparent pricing of products and violate customer rights and protection. "Many banks have appreciated our concerns and have discontinued with the practice," the central bank said, but added that there are some who haven't fallen in line. While the move is aimed at protecting unsuspecting customers, retailers fear that this is going to impact festive sales, since 20-30% of customers depend on zero interest or discounted bank loans for their purchases.

RBI said the interest element is camouflaged and passed on to customers in the form of processing fee. It has also directed banks to share the benefit they get from retailers.

http://economictimes.indiatimes.com/news/economy/policy/rbi-ends-0-interest-rate-schemes-for-purchases-through-credit-card/articleshow/23065285.cms

India cars: Better than new?

Even as India's new car sales stutter, the country’s used car sales are still going strong.

India’s automotive sector is going through one of its worst slowdowns in two decades. Though August sales were up year-on-year, this was only compared with last August's strike at Maruti Suzuki. The long downward trend is likely to continue for the rest of this year at least. Yet there is one part of the market that is still booming: used car sales.

According to the latest available figures, from research firm Crisil, between fiscal years 2007 (FY, ended March 2007) and FY2012, sales of used cars in India grew at a compounded annual growth rate of 22%, from 1m units to 2.6m units worth Rs520bn. That outpaced sales of new cars, which grew from 1.1m to 2m in the same period. Crisil forecasts that the used-car market will grow at 22-24%, to 7.7m units from FY12 through FY17, at which time sales of new cars will be 4.3m.

There are several reasons for this growth. For consumers who are watching their wallets, used cars offer value for money, at an average price of around Rp200,000 (US$3,155) per car, against an average of Rp400,000 for a new car. Higher excise duties and rising road taxes have made new cars more expensive, while high inflation has also raised interest rates on automobile loans. This, coupled with economic uncertainty, is prompting more car buyers to postpone a new-car purchase and turn to used cars instead.

Demand is also being fuelled by India’s smaller towns and cities, which house a growing population of upwardly-mobile but budget-conscious customers. Meanwhile, the supply of used cars has increased in recent years, as customers have begun upgrading to newer cars more frequently than earlier. With the rise of two and even three-car households, cars are better maintained, adding to the supply of good-quality cars.

A market develops

A key factor in growing this market is the rise of organized players. According to Crisil, until FY2007, the used car market was dominated by direct customer-to-customer sales supplemented by unorganised players. Organized players had a miniscule 4% market share in that year. However, the share of organized players rose to 16% in FY2012 and is forecast to grow to 25% by FY17, as companies recognize the potential in this business.

Organised companies come in several different flavours. The first is several auto makers who deal in only their own brands, in the hope that this will provide a counter cyclical revenue stream as well as boosting new car sales as customers upgrade. Auto maker Maruti became the first major organised player to enter this market, launching its used-car brand Maruti True Value in 2001. It now has over 454 outlets in 260 cities, selling around 250,000 used cars a year. Several others auto companies have followed suit, notably Tata Motors, which sold 96,827 cars under its assured pre-owned car programme last year.

Several luxury car makers, including Audi and Mercedes-Benz, have also ventured into the used-car segment, to cater for aspirational but still price-conscious buyers. India imposes 100% customs duties on luxury cars, while a fast-depreciating currency is making imported cars even more expensive. A quick turnover of new-car buyers, who tend to change their cars every two years on average, also ensures a good supply. As a result, used luxury cars cost almost half the price of their new counterparts.

Audi India, which inaugurated its pre-owned car programme in December 2012, expects to sell nearly 700 vehicles by end-2013, and to increase its pre-owned centres from 3 to 10. Mercedes-Benz India’s pre-owned cars programme sells close to 100 units a month, growing in double digits both last year and this year, while BMW India now has 10 exclusive showrooms for its pre-owned cars across the country.

Meanwhile, several auto companies have set up multi-brand used car operations. Mahindra First Choice Wheels, part of automotive group Mahindra, says it will likely sell about 65,000 used cars during FY2013. It plans to increase its 255 dealerships to 355 this year and to 500 by 2017. Toyota Kirloskar Motor, the Indian subsidiary of Japan’s Toyota Motors, also plans to expand its used-cars network, which deals in both Toyota and non-Toyota cars, from 50 outlets to 65 outlets by end-2013. Honda India sells only used Honda cars, but will accept non-Honda cars in part-exchange. Honda expects to sell up to 1,000 used cars this fiscal year through its certified programme, Honda Auto Terrace.

Rounding off these choices are several independent used-car companies, from websites such as Carwale.com, to multi-brand automobile sales and service chain Carnation Auto, which plans to have about 50 outlets by March 2014. ALD Automotive, the multi-brand vehicle leasing and fleet management business of Société Générale Group projects a 38% rise in its used-car sales by March 2014, to 2,500 vehicles.

Organized companies offer several benefits. Before being sold, the used cars are often refurbished and certified by in-house engineers. They also offer warranties of up to a year, some free services, financing schemes clear documentation, credibility, transparency and good retail networks. All of that in turn gives customers confidence, reducing their fears of being cheated and creating a virtuous cycle of higher demand.

In the long run these factors should benefit the new car market too, providing potential buyers with funds and a confidence boost by making it easier to sell their older vehicles. Indeed, even before that, the decline in new car sales is likely to start driving up prices in the used car market. That could dampen a market that is currently still in overdrive.

http://viewswire.eiu.com/index.asp?layout=ib3Article&article_id=880959072&pubtypeid=1112462496&country_id=1570000157&mkt_tok=3RkMMJWWfF9wsRois6TIZKXonjHpfsX54uwvXq6g38431UFwdcjKPmjr1YcJSMV0aPyQAgobGp5I5FEPQrPYRK1jt6QEXw==

Air India, SBI Cards launch co-branded credit card

Air India has tied up with SBI Cards to launch a co-branded travel credit card that seeks to add value to the travel experience of Indian customers.The offering from this tie-up comprises Platinum as well as a Signature card.

Given the value proposition offered by the new Air India SBI Credit Card, it is going to wipe out all other credit cards in the market and achieve a significant market share in the next few months, said Rohit Nandan, Chairman and Managing Director, Air India. The new Air India SBI card allows a customer spending Rs 5 lakh in a year to earn up to three Delhi-Mumbai return tickets on Air India. The launch of this credit card marks the beginning of a new collaboration between the two major public sector entities (Air India and SBI), Nandan added. He expressed confidence that both Air India and SBI Cards will live up to the promises being made in their new collaborative journey. “The challenge lies in the delivery”. State Bank of India is also the leader of a consortium of banks that have helped Air India in its financial restructuring exercise. SBI Cards is a joint venture between SBI and GE Capital. Speaking at the launch event of the card, SBI Chairman Pratip Chaudhuri said the days of monopoly in various businesses are over in India and both SBI Cards and Air India need to focus on customer delight. Outlining the rationale for this tie-up, Chaudhuri said that Air India is bringing to the table a great travel product and SBI the widest distribution network (about 15,000 branches). “We are extremely pleased to partner with Air India and hope that our combined synergies ensure a rewarding experience to our customers in the travel segment”, Chaudhuri said.

HDFC Bank's credit card base shrinks

Also sees decline in value of credit card transactions

The uncertain macro-economic environment may have prompted HDFC Bank to go slow on expanding its credit card portfolio. For the first time in past several months, the country's largest credit card issuer saw a sharp decline in its credit card base on a month-on-month basis.

HDFC Bank closed June 2013 with a portfolio of 5.94 million credit cards compared to 6.56 million cards a month earlier. The private lender's card base was at its lowest level since August 2012. The value of HDFC Bank credit card transactions through POS (point of sale) terminals also fell to Rs 3,350 crore in June 2013 from Rs 3,674 crore in the previous month.

The bank's credit card base has expanded every month between April 2011 and March 2013. It fell marginally on a month-on-month basis in April 2013 before rising again in May 2013. But in June 2013, the credit card base declined by almost 9.5%. "The current environment is not ideal for unsecured lending. Also, HDFC Bank's credit card base has become large in the last couple of years. So, probably the bank has decided to go slow and refrain from aggressively expanding this business," a banking analyst told Business Standard requesting anonymity. HDFC Bank did not offer comments for this story. An email sent to the bank's spokesperson went unanswered.

A few bankers said the Telecom Regulatory Authority of India's (TRAI) warnings to banks on making unsolicited calls to customers for selling their products and services may also have a role to play. "HDFC Bank's model for card acquisition is dependent on tele-marketing calls. In recent times, TRAI has become extremely vigilant and has warned banks not to make unsolicited calls to numbers that are in the do-not-disturb (DND) registry. This has affected HDFC Bank's new card acquisition. The attrition numbers are also high since HDFC Bank has a very large base of credit card holders. These factors have contributed towards the month-on-month decline in the bank's credit card portfolio," said a senior executive of a large private sector bank.

Industry analysts and bankers also said that in the wake of alleged violation in KYC (know-your-customer) norms the bank may have been reluctant in offering cards to customers who do not have a banking relationship with HDFC Bank in the past.

However, some of the banks that had slowed their unsecured lending expanded their credit card base on a month-on-month basis. For instance, ICICI Bank's credit card portfolio increased to 2.95 million at the end of June 2013 from 2.89 million in the previous month. Hongkong and Shanghai Banking Corporation's (HSBC) credit card base also increased marginally to 505,158 from 503,966 during this period.

http://www.business-standard.com/article/finance/hdfc-bank-s-credit-card-base-shrinks-113090400138_1.html

Qatar Airways and ICICI Bank enter into partnership

The alliance offers exclusive savings on flight bookings made with ICICI Bank Cards

Qatar Airways, the national carrier of the State of Qatar and ICICI Bank India, India's largest private sector bank, announced a partnership offering debit and credit card holder's discounts in Business and Economy Class to destinations across Europe, Africa Australia, North America and South America.

The new partnership will enable card members to enjoy up to 10% savings in Economy Class and 15 percent in Business Class. Members can make bookings online at www.qatarairways.com/in-icici using their debit and credit cards. The offer is valid for sale ­­­until 15th September 2013 and all travel must be completed on, or before, 31 March 2014.

The partnership offers ample travel benefits to the wide and strong customer base of ICICI Bank. Qatar Airways aims to provide a generous and consumer-centric offer as well as build a memorable experience for its flyers.

Customers can also enjoy additional benefits and rewards with Privilege Club Programme. The Business Class passengers can enroll and accumulate 6,000 bonus Qmiles while Economy Class passengers can accumulate 3,000 bonus Qmiles. These miles can be redeemed for various benefits like excess baggage, upgrade etc.

Qatar Airways country manager, India, Henry Moses, said: "Qatar Airways is pleased to enter into a partnership with an industry leader like ICICI Bank. The strong customer base and wide reach of ICICI Bank combined with our expertise in travel will be a win-win situation for both partners. The objective of the partnership is to provide ICICI cardholders along with unmatched 5-star service and hospitality on board world's best airline. In line with our commitment and the consistent increase in demand from Indian passengers, we will continue to conceptualize and invest in such special offers in the future."

Qatar Airways has seen rapid growth in just 16 years of operations, currently flying a modern fleet of 127 aircraft to 128 key business and leisure destinations worldwide.

In a short span of 16 years, Qatar Airways has grown to over 120 destinations worldwide, offering unmatched levels of service excellence. Award-winning Qatar Airways, named Airline of the Year for the second consecutive year by industry audit Skytrax, has an extensive Indian network offering 95 passenger flights non-stop each week from 12 gateway cities to Doha.

The airline's Indian operations cover daily services to Doha from Mumbai, Ahmedabad, Amritsar, Goa, Hyderabad, Kolkata, Kozhikode, Trivandrum, Chennai and Bengaluru, together with 11-flights-a-week from Cochin and double daily flights from Delhi. It offers onward connections to an exciting array of over 100 destinations across Europe, Middle East Africa, North America and South America. Qatar Airways also serves the Far East and Australia from Doha

Qatar Airways has so far launched eight destinations this year - Gassim (Saudi Arabia), Najaf (Iraq), Phnom Penh (Cambodia), Chicago (USA), Salalah (Oman), Basra (Iraq), Sulaymaniyah (Iraq) and Chengdu, China.

Over the next few months, the network will expand with the addition of further destinations - Addis Ababa, Ethiopia (September 18), Ta'if, Saudi Arabia (October 2), Clark International Airport, Philippines (October 27) and Philadelphia, USA (April 2, 2014).

http://www.ciol.com/ciol/news/194925/qatar-airways-icici-bank-enter-partnership

ICICI Bank plans to issue 5-lakh credit cards in FY14

ICICI Bank, the country's largest private sector bank, plans to issue five lakh new credit cards in 2013-14. 

The bank has a credit card base of 2.95 million cards. "We have the largest number of active cards. Almost 90% of our cards are active. Our spend is one of the highest in the industry," said Rajeev Sabharwal, executive director, ICICI Bank. 

The monthly spend on the bank's Sapphiro credit card stands at Rs 85,000 compared with an industry average of Rs 55,000. The bank has also seen a surge in online usage of cards. Online spends account for almost 35% of the credit card spends. "The bank has 30% share in online credit card spends and 35% market share in volume,'' said Sabharwal. 

The private sector lender that was consolidating its credit card book after a surge in credit delinquencies in 2008 is now building its book aggressively. HDFC Bankcontinues to be the market leader in the credit card business with 5.94 million cards. The country's second largest private sector bank, HDFC Bank, that was untouched by the 2008 crisis, has seen its credit card base shrink to 5.94 million credit cards at the end of June from 6.56 million at the end of May. There are four dominant players in the credit card market, including HDFC Bank, ICICI Bank, Citibank and Axis Bank. Post the 2008 crisis, Deutsche Bank, Royal Bank of Scotland and Barclays exited the credit card business. 

http://economictimes.indiatimes.com/personal-finance/credit-cards/news/icici-bank-plans-to-issue-5-lakh-credit-cards-in-fy14/articleshow/22540971.cms

ICICI Bank Carbon Credit Card: Asia's First Credit Card Powered by VISA CodeSure

ICICI Bank , powered by Visa CodeSure, is a revolutionary new credit card form factor with an in-built microprocessor; designed to give you additional safety for online transactions.

It incorporates an alpha-numeric LCD screen, a 12-button touch keypad and an in-built battery with a lifespan of 3 years. Available in Asia for the first time, ICICI Bank  enables you to generate highly secure One-Time Passcodes (OTP) for online transactions on the card itself, effectively eliminating the risk of fraud.

As a one-time activity, you need to register for Visa CodeSure and create your unique 4-digit CodeSure PIN. This CodeSure PIN can then be used to generate dynamic passcodes on your ICICI Bank  for online transactions.

Features

ICICI Bank  can be used just like any other ICICI Bank Visa Credit Card to complete transactions at merchant outlets and ATMs. However, the below mentioned unique features of this card enable you to generate highly secure dynamic passcodes for online transactions on the card plastic itself.

               

LCD Screen
Now you can generate dynamic One-Time Passcodes (OTP) on this screen using your 4-digit CodeSure PIN.

12-button touch keypad
The 12-button touch keypad enables you to enter your 4-digit CodeSure PIN to generate dynamic passcodes on the LCD screen.

Microprocessor and a Battery
Available with a lifespan of 3 years.

http://www.icicibank.com/Personal-Banking/cards/Consumer-Cards/Credit-Card/carbon-card/index.html

Change to American Express Gold Card Rewards Structure

This communication is in reference to the 1,000 bonus Membership Rewards^® Points earned by spending on your American Express Gold Card with minimum 4 transactions of at least Rs.250 each in a calendar month. In this connection, we wish to notify that with effect from October 1, 2013, this threshold of Rs.250 is being increased to Rs.1,000. However, the requirement of minimum 4 transactions in the calendar month remains same. All other terms and conditions related with the product remain unchanged.

SBI car loan for salaried individuals gets tougher: Report

India’s largest lender State Bank of India (SBI) has put some restrictions in its car loan segment, in a move to bring down the rising cases of defaults. According to media reports, the bank announced that the eligibility limit for loan issuance for salaried individual for car purchases was raised from Rs 2.5 lakh per annum to Rs 6 lakh per annum for non-SBI bank account holder. The limit has been raised to Rs 4.5 lakh for SBI account holder. The report from Economic Times said that SBI has also increased the service charges by 0.51 per cent. Analysts said that the move will directly have an impact on sales of passenger car makers which are already reeling under high interest costs and slowing economy. Meanwhile, the report cited a private bank executive as saying that defaults in two-wheeler loan segment has gone up by 3-4 per cent in last few months. The move comes at a time when Finance Ministry has been pulling up public sector lenders to take action against defaulters and bring down their NPAs.

Citi successfully completes the acquisition and conversion of Best Buy's U.S. credit program

Citi announced that it successfully completed the acquisition from Capital One Financial Corp. of Best Buy's U.S. credit card portfolio and the conversion of the portfolio to Citi's systems. Citi Retail Services, the premier provider of credit card products, services and solutions for North America retailers, will manage the portfolio going forward. The portfolio currently totals more than USD 6 billion in receivables.

"Executing a conversion of this size in less than seven months is unheard of in the industry," said Citi Retail Services CEO Bill Johnson.

"The success of this endeavor speaks not only to the value we place on Best Buy as a client, but to the commitment and expertise of our people." "The transition of Best Buy's card portfolio to Citi Retail Services reflects our determination to provide outstanding service and financing offers for our customers," said Mark Williams, president, Best Buy Financial Services. "As part of this transition Best Buy will also be able to further strengthen our customer loyalty program - which is already among the largest and best programs of its kind." The addition of more than USD 6 billion in receivables strengthens Citi Retail Services' position as a leading provider of private label and co-branded card products to U.S. retailers and their customers. The business services millions of accounts for a number of iconic brands, including ExxonMobil, Macy's, Sears, Shell and The Home Depot. The long-term strategic agreement between Citi and Best Buy, the global leader in consumer electronics, was originally announced in February of this year.

Citi does not expect the impact of the agreement, acquisition and conversion to be material to its earnings in 2013.