High CIBIL Score Must For Loan Approval in India

With the establishment of CIBIL, Banks have taken a breather as Fly By Night Loan takers and defaulters have been permanently banned from extending Loan facilities. Harshal Chandorkar, VP of CIBIL said that according to Data Mined by them, Banks and Financial Institutions are Approving Loans for Customers with High CIBIL Transunion Score.

Score Card below suggests that 90% of the Loan Approvals so far in 2011 are given to consumers with CIBIL TRANSUNION Score greater than 750 of which bulk of them have score greater than 800.
Advise To Loan Seekers:
Does High CIBIL Transunion Score Approves My Personal / Home Loan ?
Your chances of approval are VERY HIGH. However, bankers also see the Income [as appearing on Income Tax Records, no Black Money] and your current Loan Burden if any + EMI burden from fresh loans. Banks have internal credit policy before approving any loans and in the worst case they approve for an EMI equal to 40% of your Monthly Disposable Income.

So start behaving responsibly with your Credit and Build Repayment Track Record which will help boost CIBIL Transunion Score.

You can Order Your CIBIL Transunion Credit Report Now.

Indian Consumer Rights on Fraudulent Card Transactions + Disputed Charges

The Indian Credit Card Industry is bogged down with Thousands of Complaints of Fraud and Disputed Charges. The RBI is trying its best and thus we approached the RBI with your questions and here is what the bank has to say.

As a Credit Card Customer of a Bank regulated by RBI, what are my rights when a fraudulent transaction occurs on my card which is reported to the bank as disputed transaction?

RBI's Response is as follows,

(i)In terms of Paragraph 4 of the Master Circular on Credit Cards Operations [PDF] of Banks, Banks have been advised that the card issuing bank should ensure the wrong bills are not raised and issued to customers. In case, a customer protests any bill, the bank should provide explanation and if necessary documentary evidence to the customer within a maximum period of 60 days with the spirit to amicably redress the grievances

(ii)Further, in terms of paragraph 6.2 (c) of the above circular, banks have been advised that they should be careful before reporting the default status of credit card holder to the CIBIL in case where there are pending disputes. The disclosure / release of information should be made only after the dispute is settled as far as possible. In all cases, a well laid down procedure should be transparently followed. These procedures should be transparently made known as MITCS - Most Important Terms and Conditions.

(iii)Also, in terms of paragraph 9 of the above circular, banks have been advised that they should set up internal control system to combat frauds and actively participate in fraud prevention committees / task forces which formulate laws to prevent frauds and take proactive fraud control and enforcement measures.

Should the Customer Pay the disputed amount [if capable of paying] to the bank or does the customer has the right to abstain himself from paying the disputed amount until the issue is resolved?

RBI's Response,

Please See Reply as Above

Does RBI Maintain a Blacklist of Merchants where Fraudulent Credit Card Transactions have occurred Or Does RBI Advise Banks to Maintain a Registry of Merchants where Fraudulent Transactions have occurred? If so, what is the action initiated by RBI on such Merchants?

RBI's Response is as follows,

RBI does not maintain any such blacklist of merchants nor has RBI issued any instructions to banks to maintain a registry of merchants where fraudulent transactions have occurred. Please see RBI's response sub-paragraph (iii) above

What does RBI rules / regulations / notifications / act / etc say on reporting the account by the Bank to Credit Bureau – CIBIL during an ongoing dispute of fraudulent credit card transaction between the Bank and the Customer ?

RBI's Response is as follows,

Please see RBI's response sub-paragraph (ii) above

For the convenience of Consumers, we are attaching a Scanned Copy of our correspondence with RBI [PDF] which can be used as 100% LEGAL Representation. print a Copy of the PDF and Attach with your Dispute to the Credit Card Company and also Refer to RBI's Master Circular - DBOD.No.FSD.BC. 14 / 24.01.011/ 2011-12 in your correspondence.

Questions and Comments are welcome on the Credit Card Forum

Government Rules on CIBIL Status Update for Settlement of Personal Loans / Credit Card Accounts

Now that we are getting lot of e-mails on the subject of what does the Actual RBI / Ministry of Finance Rules state on the Status of a Loan Account / Credit Card mutually settled between the Bank and the Customer. We had asked the RBI this Question,

In case of a Loan / Credit Card account settled mutually between the Bank and the Customer after the customer had defaulted on payments, I would like to know, what the Bank is supposed to update at Credit Bureau – CIBIL for “STATUS” column of this particular account under consideration in accordance with RBI rules / regulations / guidelines / act / etc. Kindly provide photocopy of appropriate RBI legal document / documents relevant to this subject.

RBI's Response to the Question is as follows,

You may kindly refer to the Regulation 10 (a) (ii) of Credit Information Companies Regulations, 2006 and Rule 22 of Credit Information Companies Rules, 2006

We are attaching a Scanned Copy of our correspondence [PDF] down with RBI for your ready reference.

What does Regulation 10(a)(ii) of Credit Information Companies Regulations Act Say?

Every credit institution shall -
(A) keep the credit information maintained by it, updated regularly on a monthly basis or at such shorter intervals as may be mutually agreed upon between the credit institution and the credit information company; and
(B) take all such steps which may be necessary to ensure that the credit information furnished by it, is update, accurate and complete.

What does Rule 22 of Credit Information Companies Act say ?

Updating of the credit information by credit Institution. -
Without prejudice to the provisions of rule 21, if there is any change in the data, information or credit information, already furnished to a credit information company due to change in the liability of the borrower or his guarantor, on account of write off in full or in part of the amount of outstanding dues of the credit institution or the repayment thereof by the borrower or his guarantor, or release of the guarantor, or any scheme of arrangement entered into between the credit institution and the borrower, or the final settlement of the amount payable by the borrower pursuant to any scheme of arrangement with the credit institution, as the case may be, or on account of any such other reason, the credit institution shall,-
(a) continue to update such data, information or credit information promptly or in any event, by the end of each reporting period not exceeding thirty days until the termination of the respective account relating to such credit information; and
(b) furnish an updated credit information to the credit information company at the earliest in this behalf.

It is now amply clear on why we advised for Tough Negotiations During Settlement on the CardBhai Forum. Questions and Comments are Welcome :-)

Foreign Banks Drops Customers in India

The American Credit crisis has led many Foreign Banks operating in India to take a cautious approach when issuing credit facilities. Records obtained from the RBI in 2010 suggests that they trimmed credit card customer base in India by a whopping 18% from 7.08 Mn in Dec-09 to 5.8 Mn at the end of Dec-2010.

Citibank the largest and HSBC the second largest issuers of Credit Cards in this Category [Foreign Banks] cut their customer base. RBS (ABN Amro), Barclays and Deutsche bank also trimmed their card base.

American Express bucked the trend and added 10% during this period while Standard Chartered has managed to maintain its base and seize the second spot from HSBC.

One surprising trend that is evident is these Foreign banks issue very less debit cards and the number stands at 4.02 Mn :-)

Complete Trends of Credit Cards in India is available here.

India - Top Issuers of Credit Cards

We were the First in Global Media to do metrics on the size of the Plastic Money [Credit / Debit] Market in India. We have received quite a number of e-mails and hence for your convenience, here is the latest update on the Data of the Indian Credit / Debit Card Market.

Total Number of Debit Cards - 211.87 Mn
Total number of Credit Cards - 18.18 Mn

Surprised on the number of Credit Card User base being Shrunk ? It is because of ICICI Bank, which canceled 25% of its Credit Cards.

Debit Cards - Almost all the Banks have issued Debit Cards in tie-up with VISA or MasterCard. Here is break-up of Debit Card Issuing by Banks
All the PSU Banks - SBI, Canara, PNB etc together have issued - 154.79 Mn Debit Cards
Indian Private Sector Banks - HDFC, ICICI, Federal etc together have issued 53.05 Mn Debit Cards.
Foreign Banks operating in India - HSBC, Citi etc have issued mere 4.02 Mn Debit Cards

Credit Cards - The PSU Banks who have tasted defaults and delinquencies at all levels were extremely careful in issuing credit cards and have thus far issued only 3.03 Mn Cards which is a good move in my view as the industry needs stronger regulations as well as matured customers.
Private Sector Indian banks - Somewhat aggressive earlier have turned cautious and have a collective credit card customer base of - 9.3 Mn
Foreign Banks in India mostly serving the Corporate Sector have managed to issue 5.8 Mn Credit cards thus far.

Data Courtesy - RBI
For Complete Data, you can drop a line to feedback At Cardbhai Dot com.

Mis-Selling + Poor Customer Care - Status of Indian Card Industry

We have been writing on this Site for over 2 years not to go for Credit Card if you are unsure of what product you are opting for. Today, we would like to substantiate our statements with Facts Released by the RBI - The Supreme Regulator.

RBI has received a whopping 18,1810 in FY 2009-10 complaints all related to Credit Card operations by banks, an increase of 80% in the Number of Complaints lodged with the RBI Ombudsman. According to RBI Official, most of the complaints were related to

issue of non-transparency and mis-selling

The RBI has taken a strong view of the note that the Credit Card Issuing Call Center Employees are ill-trained, have no knowledge of the product, which has led to extremely poor customer experience.

Other popular complaints with the RBI are - Excessive Billing, Threatening Calls by Collection Agents and Wrong / False Billing [Stolen Cards etc].

Once again, stay away from Credit Card companies as their operations are completely shady and what RBI is doing is certainly not enough. Pre-Paid Cards is the best option for sufficing your Online Shopping needs and wait for the Industry to Mature or you get the capacity to sustain small blows from these companies :-)