The Indian credit card market is quite complicated. In a country like India, with a population of 1.1 billion, only 15 million credit cards have been issued at present. Hence, the credit card industry in India has many reasons to grow rather than decline, despite tightening of regulations.
The regulator has asked the banks to maintain a do not call registry and keep a check on the list to avoid their telemarketing agents to call these clients. Banks themselves would be made responsible for any unsolicited calls made by their tele-marketing agents.
It is clearly the prerogative of the client to enroll themselves in the Do not call registry of the credit card issuers.
The new set of norms clearly give the banks a strong incentive to ensure that their agents act in a responsible manner and represent the bank in the right way.
It is also important that we respect the privacy of customers. Also, each bank would have to devise a right mechanism to determine the credit card limit for each of its client and accordingly extend credit to its clients considering the credit availed by him from other banks.
The central bank has also put forth guidelines to prohibit any unfair tactics for recovery of credit card outstandings. The move is also appreciable as it would result in the existence of fair market practices and thereby enable the credit card market to move in the right direction.
The present credit card market is quite competitive, and ultimately it is market forces that determine the interest rates. There are markets which have moved to low interest rates on credit cards. However, this is based on the robust credit assessment system prevalent in those economies.
In the case of India, the credit assessment system still needs to be strengthened. This would happen gradually and would eventually result in the lowering of interest rates on the credit cards. However, in the present environment, there seem to be no immediate signs of interest rates cooling off.
Also, the Credit Inform-ation Bureau India Limited would play a big role in moving towards a more informed decision-making approach and thereby help this market to develop further.
The writer is head, personal financial services, HSBC India