Rising credit card defaults, banks tighten credit procedures

Not a good news! Credit card business is facing a serious slow down as the number of defaults is on the rise. Hence banks are tightening the diligence procedure.

As per the data given by Business line, the total card base in the country currently stands at 26 million. According to RBI, new credit card growth has fallen from 33% in 2006-07 to 18% in the just concluding fiscal till February.

As per reported by The Economic Times Mr Tarun Bhatia, Head-Financial Sector ratings, CRISIL said "While earlier, banks would extend loans to customers with a minimum annual income of Rs. 80,000, they have now increased this to a minimum of Rs.1.2 lakh. Banks are also asking for the PAN card and strictly following other 'Know Your Customer' procedures before giving credit cards."

ICICI Bank, one of the largest providers of credit cards in the country has slipped from the average growth of 40% to around 20-22%.

Mr Sachin Khandelwal, Head-Cards Product Group, ICICI Bank said "The overall slowdown in retail loans has also rubbed off on the credit card segment."

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