Inadequate Credit Monitoring hits card repayments

The recent trend in the market has shown a spurt in late credit card repayments mainly due to inadequate credit monitoring system in India for large players like Citigroup. According to official statements, the bank's Asian credit card operations have been performing well, except in India. According to an article in the Economic Times, bank officials have blamed this rise in delinquencies as a result of the lack of robust credit monitoring operations in India, and have voiced their opinions over the lack of an authorized bureau for this purpose. However, even credit card providers are not entirely innocent in this matter

In today's cut-throat competition, in order to lure customers, credit cards are being issues free of charge by negotiating on the requisite attention that needs to be paid heed. It is not uncommon to receive a call from any DSA or bank informing you that you are now 'eligible for their gold/platinum card and asking if you would be interested in the same (many times they don't even ask, and ramble on regarding the documentation and benefits) initially, Citibank was the premier player in the credit card domain. However, with the passage of time and the gradual expansion of market, many other players like HDFC, SBI, etc. encroached upon its space, which eventually led to banks giving cards free of cost and not being completely transparent with charges like annual maintenance fee and the likes. Recently, even the RBI has taken strict action and issued guidelines against banks that have been issuing unsolicited cards.

At present, CIBIL(Credit Information Bureau of India) is the country's one and only functional credit Bureau where the banks can report delinquent customers there. However, at present, majority of the banks are not satisfied by the way it has been performing. In the wake of all this, the finance ministry also had announced the setting up of a private credit bureau in the country along with the RBI earlier this year, which had prompted foreign players like Experian to come to India. In recent news, even IDBI Capital and CARE (Credit Analysis and Research) have collaborated in their efforts to set up a credit information bureau. However, while all these moves are towards the benefit of the economy, I would like to point out that this is just the begining for these initiatives, and much has to be done to ensure the smooth functioning of the same. Hopefully, we will soon make headway into this area, which is all the more essential in today's circumstances, when we so desperately need a stable economy.