Banks offering lucrative schemes to card holder to recover dues

Banks are facing problem in recovering credit card dues. Last year due to economic crisis and regression in jobs there has been sharp increase in bad assets linked to them due to this many banks will be flushing out credit cards from the market, instead increase debit card count.

Thus most of the major banks including ICICI Bank and Citibank are cutting down their credit card exposure and are offering lucrative schemes to card holders. But banks are not publicizing these schemes as it might increase the risk of defaults from other card users who are regular with the payments and opt for these easier settlement options.

So, if you have large outstanding on credit cards and paying the usual high interest on the same, you can avail this opportunity to convert credit card loan to a lower interest bank loan on a long tenure.

An anonymous senior ICICI Bank official told, “There are various structured payment plans that we’ve been offering. These limited schemes are worked out in consultation with the customer as an alternative repayment plan.” The reporter of ET emailed a query with this regard but did not get any reply from the bank. However banks are offering different-different schemes.

In case you have an outstanding loan of around Rs 2 lakh on credit card and have been paying high interest of 18%, now is the chance to convert it into a regular loan, which you can pay over a period of three years, and the interest rate will be as low as 12%. Citibank, Sandeep Bhalla, a business manager cards, said, “We have a retention-oriented, assistance-based collections process, and if there is a genuine inability to pay, we work closely with customers to offer repayment solutions based on his or her cash-flows.”

There are around 2.5 million Citibank card holders. A CIBIL spokesperson told that when a bank sends a report of restructured loan it is displayed in CIBIL records as it is and also reflects in the same manner in the credit report.

Banks refused to disclose their bad loans, but they are moving very cautiously.

By the end of October 2009 there has been sharp decline of 21% to 21.1 million in a credit card base from 26.7 million a year ago. The decline was also seen in the credit card outstanding, by 12.13% to Rs 5,660 crore at the end of October 2009, from 6,442 crore a year ago.

According to Venture Infotek study all banks are reducing their credit card business. ICICI bank the largest credit card issuer has cut down the number of card holders from 9 million in 2008 to 7 million in 2009.