GOVT / RBI tightening credit card / lending norms

[bengaltiger]

In coming days getting credit card will be difficult.
RBI tightening rules and regulations.

RBI tightens norms for personal loans and credit cards, raises capital requirements

The new norms will make personal loans and credit cards costlier and may curb growth in these categories

www.livemint.com

BT

 

[tuhin]

RBI should start some drastic action on loan volumes otherwise Indians are becoming loan addicted. Few people have actual financial discipline. Others are actually inflating market price, that's it

 

[Jhon Anand]

After some time(Atleast couple of years) they'll relax and then there would be a lot of LTF offers 😂😂

 

[RAMESH BABU N]

I welcome this step, if it's true.

Ideally, 3 or 4 times of one's officially declared income via ITRs - should be the MAXIMUM COMBINED LIMIT of ALL CREDIT CARDS.

Results in :

1. Optimal use of cards - now only 2% of all Trxns are done via DCs and less than 3% via CCs in India.

2. Inculcating Financial Discipline

3. Healthy competition among CC issuers. Focus shifts from numbers issued to customer service N increased VFM level.

4. Can be implemented easily. If not all, most are PAN based n CIBIL reported.

5. Erratic Bankers can be banned from CC business.

6. Innovative tie-ups will come into play.

7. Instead of more-CCs-per-customer, focus shifts to more-original-customers. Expanding to reach more.

8. More towns can be covered. In these days of better communication n courier services, almost all areas can be serviced.
When branches have reached all corners, why not CCs.

9. Incentive to declare more income in ITRs.

10. Instead of every micro/mini/small sized bank issuing CCs, let there be a dozen or so big n dependable banks do the job. Improves our image globally.

 

[RAMESH BABU N]

11. Reduces disuse n clutter.

12. If a better CC is launched, there will be pressure on existing players to match up their CC features or offer better incentives or better service.

13. Approvals should NOT be linked with Limits. Let the user decide - dynamically - each year - how much limit each of his/her 3 or 4 cards should have.

14. Upon approval, the user must decide on which card(s) to retain or discard.

15. C2C, LTF.... Can continue.

16. Overall CL will be strictly linked to ITR.
No need to ask, no need to approve. No heart-burns.

The above are 16 immediate points I could think of. Let us add more or modify these. And, let's wait n see... What will be the new set of rules....

 

[pxg]

I welcome this step, if it's true.
...

2. Banks run on fees from people not having financial discipline. And they share some of those benefits with us (this entire forum). A higher limit encourages the poorly disciplined people to spend more and earn the bank more. And in the end people like us in the forum benefit from it. That's the entire CC business.
8. You mostly want the rich people's money from cities, as they spend more and the shops there are ready to give up 1-3% of the invoice cost to MDR.
9. ITR should not be linked with CC spends. You forgot that my dad can transfer any amount of money to me to spend on MY card. What are you planning to implement next, a social credit system?

Think about it. Banks are lending for 60 days interest free almost. If they don't have any incentive to earn apart from the MDR then all rewards will vanish and this forum can be shut.

And what you are suggesting is essentially enabling a nexus-mafia of such banks to form instead of allowing smaller banks to innovate. Some of the fintech apps are genuinely nice, some of the smaller banks (e.g. IDFC First, when it started issuing CCs) are much better than the biggest card issuers like HDFC, etc.

In the west, economy thrives when rules are removed (deregulation), not added.

HOWEVER, I agree with RBI's actions for NBFCs. Too many smaller entities and the loans from the NBFCs are too accessible, creating a systemic risk.

 

[RAMESH BABU N]

Who am I to recommend or even suggest ? Like you N most of others here, I am giving my take on the planned GoI/RBI moves, if any. I do not know about you, but the above observations/opinions are based on what I saw in the last 30 years of CC industry in India n abroad.

When a chap has 1L as monthly salary and declares 15L as income in ITR, I see no reason or logic in that chap having 15-20 cards - aggregation to 60-70L as combined limits. It looks silly considering that CC billing is done EVERY MONTH with the ratio coming to 1:60 to 1:70. That's real bad.

Moreover, there is EXTREME under utilization on one hand, there is huge untapped potential in the unserviceable areas on the other hand.

Just because we have CCs with limits of 30-40L, how much of it is actually used - in a majority of the users - EACH MONTH ?

 

[RAMESH BABU N]

This is how INDIA Pays....

See the % of CCs n DCs....

 

[Slayer]

NEFT and RTGS clubbed together?