Thursday, 31 October 2013

Is Your Bank Charging Your Credit Card For Someone Else’s Dues?

Around 400 years ago, when William Shakespeare said, “What’s in a name?” he certainly did not have credit reports in mind. But, if this English genius was around today, he probably might have acknowledged, “There’s much in the name.” Reason: if you have a name which is popular or common, there is a good possibility that things might go wrong, especially when it comes to modern day banking. 
Picture this: You have a credit card with a certain bank and you are regular in paying your dues on time. One day you get a call from the bank’s appointed recovery agent asking you to make the payment on the card outstanding. You check your card details and you have no outstanding dues, but the calls just don’t stop. Even after several requests to your bank, you continue to get pesky calls from recovery agents for an outstanding amount, which was never due on your card. 
This happened for real: If you thought this is an imaginary situation, it is not. This happened for real and is cited in a Reserve Bank of India’s document. Even after several requests to the bank to stop the pesky recovery calls, it seemed the request fell on deaf ears and the customer finally approached the banking ombudsman (BO). The ombudsman investigated the matter and found that the personal details pertaining to the card (in collections) did not tally with those of the complainant.
In fact, the customer’s card number was different than the one on which the outstanding amount was due. The customer was being harassed on account of a mistaken identity. The BO found that two cards were issued to two different individuals having the same name, but the complainant was being approached for settling the dues of the other cardholder. The RBI document said, “BO advised the bank to pay the complainant compensation of Rs 10,000 for causing mental harassment to the customer who had been issued legal notices in the matter. The bank accepted their mistake.” 
What we can learn: Clearly the bank goofed up in this particular case. But, as Edward Aloysius Murphy, famous for his Murphy’s Law, once said, “Anything that can go wrong, will.” And if this is true, it’s wise to know what all can go wrong, so that you can be cautious in advance and actually avoid facing an unpleasant situation. This logic seems true even when it comes to dealing with credit cards. If you are someone who has a popular or common name, it makes sense to get your credit report at least once a year, to see if all the information mentioned on your credit report actually belongs to you and there are no cards or loans assigned to your name. 
Also, in the above mentioned case, since the customer was not on auto-pay facility, the bank had to actually make calls to recover the dues (though not his dues), but if he was on auto-pay, the bank would have simply deducted the due amount from his savings bank accounts even though the credit card dues relate to another person. In such a case, the customer would not even have realised whether the amount was small, and he wasn’t careful with checking card statements.  Hence, it’s best to avoid linking your savings bank account to the credit card to pay dues. And finally, if you have any issues with the bank and they are unable to resolve the same within the legal timeframe or you are not satisfied with their resolution, it makes sense to approach the banking ombudsman.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : First Post 

Wednesday, 30 October 2013

India High On The List Of Countries Impacted By Ransomware, Identity Theft And Phishing Attacks: Report

India figures in the top 5 in a list of countries with the highest number of cybercrime incidents, such as ransomware, identity theft and phishing attacks, according to the latest 2013 Norton Report released by Symantec (NASDAQ:SYMC), a Mountain View, Calif.-based computer security software maker.

The report said that India appears to be the ransomware capital of the Asia Pacific, accounting for 11 percent of the victims of this form of virtual extortion. In addition, India also accounts for 11 percent of the world's identity theft incidents and 9 percent of phishing attacks with the average cost for each cybercrime victim estimated to have risen to $207 from $192 in 2012.

“At first glance of the India findings, we were happy to see a significant drop from last year in the total number of victims and total cost of cybercrime, but a closer scrutiny revealed an alarming trend,” Ritesh Chopra, country manager, Norton by Symantec, said in a statement. “Today’s cybercriminals are using more sophisticated attacks, such as ransomware and spear-phishing, which yield them more money per attack than ever before.”

According to Chopra, 66 percent of Indian consumers use their personal mobile device for both work and leisure activities, which creates new security risks for enterprises as cybercriminals have the potential to access even more valuable information.

Other than Ransomware, the report said, 56 percent of cybercrime victims in India have also experienced online bullying, online stalking, online hate crimes or other forms of online harassment over the last 12 months.

While the increasing use of mobile Internet has made people’s lives easier, these conveniences often come at a cost to their security. In fact, 63 percent of smartphone users in India have experienced some form of mobile cybercrime in the past 12 months.

According to the report, many Internet users in India put their private information at risk by using unsecure services. While 61 percent of Wi-Fi users in India access social networks through a public connection, 44 percent of users in the country shop online through unsecure Wi-Fi networks.

Adding to the risk are social-network users in India who share their password with others (18 percent), don’t log out of each session (21 percent) and connect with people they don’t know (18 percent).

The report also noted that lack of awareness is not the only reason for increasing cybercrimes in India, as 55 percent of respondents surveyed admitted that the convenience of being constantly connected outweighed any potential security risks.

The report's findings are based on interviews with 13,022 adults between the ages of 18 and 64 in two dozen countries between July 4, 2013 and Aug. 1, 2013. While 1,000 adult respondents each were interviewed in the U.S. and India, 500 were interviewed in the other countries surveyed.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Credit Sudhaar' s new product CS Identity Shield aim is to protect individuals from various types of Identity theft and Cyber crime

Courtesy :

Tuesday, 29 October 2013

Credit card dues grow mere 2.1 pct y-o-y in September, says RBI

Banks have seen the growth in outstanding loans on credit cards steadily decline over the last six months. According to Reserve Bank of India's (RBI) data, credit card dues grew just 2.1% to Rs 23,500 crore y-o-y in September 2013 against a 21.8% growth in September last year.
Data from RBI showed that banks have not been growing their credit card portfolios since May 2013 and the total outstanding loans in the systems have been hovering at about Rs 23,000 crore. Credit card loans had been showing y-o-y growth in the range of 20-27% before May 2013.

Bankers say credit card spends have decreased since May and, hence, their portfolios are not increasing. "Overall spends in the system have been muted due to the slowdown in the economy and spends on credit cards are linked to people's disposable income. Even in the festival season, there seems to be no increase in spends," said Sumit Bali, executive vice-president for consumer loans, Kotak Mahindra Bank.

RBI data showed that in August 2013, y-o-y growth in credit card spends decreased to 12.18% to Rs 10,887.84 crore. This is far lower than the peak of 39.73% growth seen in November 2012.

Credit card spends are the amount of money transacted in a particular period, whereas outstanding loans is the money that the customers owe to a bank, which includes the interest.

"Banks are not being aggressive in growing their credit card portfolios. Moreover, the RBI has curbed 0% EMI schemes, which was the main driver for growth in credit cards," said A Surendran, head of retail and international banking at Federal Bank.

Meanwhile, bankers also say that transactions on debit cards are gaining more momentum and popularity.

RBI data showed the total amount of transactions on debit cards for August grew 19.09% to Rs 1, 64,896.72 crore from Rs 1,38,462.25 crore a year ago. In terms of number of transactions, the growth in August stood at 19.65.

A report by investment management company Jefferies & Co recently noted that customers are paying off their dues owed to banks rather than "revolve" their credit.

This means that the outstanding amount in the banking system is coming down and banks will not be able to earn interest on it. According to the report, the share of revolving credit has come down to 53% over the last 12 months, indicating that customers are becoming more risk-averse.

"A falling percentage of revolvers also highlight risk-aversion by customers who would rather pay off high-interest debt. This is particularly more likely given the current economic slowdown, slowing corporate profitability and no visibility in wage hike and risk of job losses," noted Jefferies.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : Indian Express

Monday, 28 October 2013

How banks can goof-up with your credit report

The prudent see danger and take refuge, but the simple keep going and pay the penalty, goes an axiom. This applies to everything in your life, but more so in your money life because here you should learn from others’ mistakes.

For example, take the goof-ups banks make on your credit cards, bank lockers, ESC and the like. If you are wise, you would learn from others’ experiences and ensure that you don’t face a similar situation. Tracking your finances, especially loans regularly is imperative, especially since nowadays credit reports and credit score matter more than ever before. So, what can go wrong between a loan and a credit report? To know more read on.

Picture this: Suppose you have a loan with bank A. You repay regularly until it is completely paid off. A few years later, you approach bank B for another loan. But to your shock, you are denied one on the basis of your credit report that shows your earlier loan is still outstanding. If you thought this is just an imagination, it is not.

According to an RBI document, the customer in question investigated further and found out that even though he had repaid his loan to Bank A, the bank had not cleared his credit report for several years. Hence, he was unable to get a better deal with the new bank. He then requested bank A to update his Cibil credit report. However, the bank said it had already done the needful. After several requests, he still saw that his credit report did not show the latest update. Finally, he approached the banking ombudsman’s office of the RBI.

What the ombudsman said: The banking ombudsman found that the bank had failed to get the Cibil database updated for the customer even after four years after the complainant had repaid the loan. “When the bank finally got his Cibil credit report rectified it did so without compensating the customer. The banking ombudsman observed that by not updating Cibil database in time, the bank had violated RBI/Banking Codes and Standards Board of India guidelines and therefore passed an award directing the bank to pay an amount of  Rs 5,000 as token compensation towards cost of pursuing the complaint,” said the RBI document.
What we can learn: There are a few things we can learn from this example. For one, do not think that your bank will automatically update your Cibil credit score, though technical they have too, above example shows, they might just miss doing so. Ensure that you review your credit report a few months after you close the loan to check if the bank has updated the latest information about your loan account to the credit bureau or not.

Another important thing to keep in mind is that the loan is not closed with just paying your last EMI. You need to tie a few loose ends to close the loan properly, for example get a no-dues-pending letter once the loan is paid off. Tracking your credit report once a year, is a good idea.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : First Post

Saturday, 26 October 2013

Beware! Identity theft and ruining a reputation online can hit you hard

One out of every five people worldwide is on a social networking website and your identity and reputation are at RISK without you knowing it!

Technology makes our lives more convenient! But with increasing convenience and information flow, it also makes us vulnerable. Growing urban population and ever evolving technology poses a challenge and makes fighting cyber crimes and imperative.

Our personal information e.g. name, date of birth, addresses, phone numbers, email IDs etc as well as sensitive financial information is pervasive and can be easily accessible online and offline.

And it is not difficult to foresee how such easily available information, can be used to commit the simplest form of identity theft and fraud, such as pretending to be someone else and taking a mobile phone connection, or opening a social network profile or even re-directing someone bank and card statements and bills to another address. And the internet makes access to personal and financial information simpler!

One out of every five people worldwide, are on a social networking website. With internet penetration in India crossing the landmark 100 million mark, Indian netizens are hopping onto them as well with equal gusto. Facebook, Linkedin, Google+, Orkut are pervasive today, especially amongst the young educated population of India. And it is an established trend for people to take risks online.

People often play with their online identities in a manner that they would never dream of, in the real world and this puts them at RISK for identity and online reputation thefts – says Asgar Patel victim of online reputation slander and he added – Beware yourself of too much online exposure.

For those uninitiated on how ID theft can happen, in the online world there are numerous website where your personal information is lying without your knowledge and in less secure environments, for fraudsters to misuse it, to their advantage. From crude methods to well organised scams, identity theft, online reputation slander works in a range of ways.

Taking a case in point, wedding is a big business proposition in India. Burgeoning Matrimonial websites in India have a have great business potential, however, these websites are a goldmine of personal information and most members might find themselves becoming victims of Identity thieves and fraudsters. Matrimonial websites tend to attract young men and women across the country and users create personal profile replete with information based on nationality, age, gender, religion, economic standard, job status, height, family background, and photograph. With this sensitive personal information, fraudsters can cause considerable damage be it to damage someone’s reputation or financially by buying a phone connection or procuring a credit card pretending to be someone else, with the information they have access to.

And the victim would not know about it until it’s too late! As per a news article, an accused terrorist confessed to have obtained SIM cards with forged papers created by gathering information on a matrimonial website. Stealing an identity is, unfortunately, surprisingly easy to do and happens when one least expects it! Protecting oneself is therefore very important.

If someone’s identity is stolen, it can take months or even years to recover from the disorder they leave behind. The number of new cases of identity theft is on the rise. This relatively new trend is the result of internet’s influence, by easing access to sensitive personal information.

>> There are 112 million claimed Internet users in India, source ComScore; Internet in India, 2011

>> Credit and Debit cards can be applied for in the name of another individual

>> Fraudulent bank loans could be taken out in the name of the victim

>> Phone connections can be taken to carry out forgery and other frauds

>> A multiple range of debts can be incurred in victim’s name

>> Email ids and social networks profiles can be created using false information

>> The information can be used in various illegal activities in victim’s name

>> Illegal acts can be performed by applying for new driver’s licenses or passport

CPP offers these warnings to help people stay safe and protect themselves. Most identity theft victims don’t come to know of the fraud until long after the incident. They dismiss possible indicators as mistakes or mix-ups and take no corrective measures like:

Unexpected verification call from a bank or a service provider

>> A warning or notice from a bank or service provider

>> Unexplained entries in your Credit Report

>> Debit of small amounts in bank statements

>> Unfamiliar purchases in your card statement

>> Receiving a statement or bill for a service you don’t have
Act Fast or Get to the Point Of No Return:

>> Do not disclose your personal details beyond what is essential, online or on social networks.

>> Do not respond to suspicious emails asking for your personal details and never disclose your bank, credit/debit card details and PIN numbers to anybody online or offline.

>> There are 112 million claimed Internet users in India

>> Ensure you use adequate updated antivirus software.

>> If you receive a request from a friend or family member stranded while on holiday asking you to transfer money to them, contact them by phone or alternative contact to verify the request is genuine before sending any money or providing personal details.

>> Regularly check your credit card and/or bank statements to ensure that suspicious transactions are detected.

>> Shred all documents containing personal information, such as credit card and bank statements.

>> Lnog directly onto websites you are interested in rather than clicking on links provided
in an email.

>> Read your credit report from time to time to track any suspicious changes.

Identity theft can have grave, sometimes devastating repercussions for its victims, ranging from financial loss, damaged credit ratings to loss of reputation. In a time when more and more information is being shared online, the security of personal information is very important.

Be careful with your personal information, since becoming a victim of identity theft can take months and even years to straighten out!

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy

Courtesy : Market Watch

Friday, 25 October 2013

Credit Sudhaar launches Identity Shield

Identity Shield service provides customers with tools required to confront identity theft crime through monitor, protect and recover steps

Credit Sudhaar, Mumbai-based Credit Health Improvement Company on Thursday launched Identity Shield service which provides customers with the tools, skills and expertise required to Monitor, Protect and Recover their identity from the risks of Identity Theft and Cybercrime. This is done by using state-of -art data patrol tools and advanced cyber security software backed by practical, legal and technical assistance required to keep their identity secure.

“We store important information online, access our accounts online, interact with friends online and we do this using various devices: PCs, laptops, tablets and mobile devices. This means that we run the risk of hackers and identity thieves stealing our information, phishing websites, key loggers who can "see" our passwords, webcam hijackers who can see what we are doing. Most people do not realise that identity theft, credit misdemeanours, malware and other such criminal acts are fast evolving and don't know how to protect themselves. Identity Thieves methods have changed - not only do they want to avoid detection for as long as possible, they are also changing their tactics to target fast growing social networks and online platforms which have severe financial consequences for consumers. 98% of Indians have not even heard of Identity Theft. This makes Indians a soft target for Identity Theft. This lack of awareness, combined with the associated lack of preventive and monitoring tools implies an even greater risk,” said, Mr. Arun Ramamurthy co-founder, CREDIT SUDHAAR.

“Our Identity is what defines us as an individual and gives our life shape. None of us would like our identity to be compromised. Yet, Identity Crime is a major menace confronting Indians today. In India, there is one victim of cybercrime every second. INR 50,000 crores is lost to Identity Crime every year in India. Research indicates an upsurge in new forms of Identity Theft such as social engineering and mobile cyber theft. This is a sign that Identity Thieves are starting to focus their efforts on these platforms. As per the recent Norton Cybercrime Report, 2 out of 3 Indians have been victims of this menace online. CREDIT SUDHAAR’s Identity Shield follows a 3 step approach to Monitor, Protect and Recover a person's identity,” added, Mr. Gaurav Wadhwani, co-founder, CREDIT SUDHAAR.

CREDIT SUDHAAR’s Identity Shield – 3 Pronged Approach
This step involves an extensive analysis of a person's credit report so that it may be tracked for stolen identities and fraudulent usage. This is combined with an extensive analysis of customers’ Credit Health and Credit Scores utilizing CREDIT SUDHAAR's unique 8 parameter Credit Health Map. The Credit Health Map is combined with a social score analysis which can help you to monitor your social environment.

Online tools and resources help you to keep abreast of the latest in the fast evolving world of Cybercrime and Identity Theft. Tracking becomes even easier with "ANYTIME, ANYWHERE ACCESS" using our mobile application which is made available to all our members.

Prevention is better than cure. Identity Crime is more often than not a result of people stealing important pieces of information pertaining to you such as identity papers (PAN Card, Driving License, Passport, and Voter’s ID). This can be prevented by storing important documents in vaults. This is combined with doorstep delivery and pickup. The vault is available both online and offline for easy and secure access.
Our protection suite contains state-of-art tools including firewalls, anti-virus, anti-spyware, anti key-loggers and password protection software. Each of these has been selected keeping in mind our day to day requirements and practicality. Whether it is desktops, laptops, tablets or mobile devices we have a solution that keeps our customers protected.

"RECOVERY" suite provides customised and enhanced protection so that our customers can live their lives with a smile. Our Identity Protection Plans, Lost Wallet Protection, Fraudulent Charges Protection have all been designed after extensive consumer research and provide unique solutions which are accessible only to CREDIT SUDHAAR’s Identity Shield clients. Our ULTIMATE clients also get access to "RECOVERY EXPERTS" who are available to help our clients navigate through any challenges that an identity thief may pose at them.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : India Infoline

Thursday, 24 October 2013

Looking to rent a house? Show your credit history first

If you are currently house-hunting, chances are that you may have to produce your credit history to the owner to ensure that you would be able to pay your rents on time.

Thanks to the economic slowdown leading to frequent layoffs and shrinking pay packets, cautious landlords are seeking credit history and ratings of their tenants before putting up their house on rents.

Sample this: Nitin Khanna, who retired two months ago after 36 years in central government service, owns a three-bedroom apartment in Dwarka.

He dismissed his tenant who had been occupying his apartment since 2010 after the latter stopped paying rents for the last five months.

Khanna has sought credit history from prospective tenants to ensure that his revenue stream does not get choked.

However, currently, only those looking for commercial space or high-end residences are being asked to provide their credit history, said real estate analysts.

Further, this trend is restricted mainly to New Delhi and Mumbai.

According to the Credit Information Bureau (India) Ltd (CIBIL) — the agency that tracks credit history of individuals and assesses their credit worthiness — the trend in India is still at a nascent stage. However, in many developing economies, it has become the order of the day.

“In India we may see this trend picking up and it could become a norm rather than an aberration,” Arun Thukral, managing director, CIBIL, told HT.

“The trend of verifying tenant creditworthiness via credit history depends on the availability of credit card history but as far as budget to mid-income segment residences is concerned, credit report use is still not a norm if we look at the pan-India scenario,” said Santhosh Kumar, CEO, operations, Jones Lan LaSalle India, a real estate consultant.

The number of individuals getting their credit score determined rose last year compared to two years ago, said Thukral.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : Hindustan Times 

Wednesday, 23 October 2013

Cyber Criminals Run Riot In India

New Delhi: As cyber criminals are using more sophisticated means like ransomware and spear-phishing, such internet frauds have cost India a whopping $4 billion (about Rs 24,630 crore) this year, a report by cyber security major Symantec said on Tuesday.
According to the 2013 Norton Report, the average cost per cyber crime victim in India is up at $207 during August 2012 to July 2013 from $192 in the year-ago period.
The report reveals that cyber crimes cost India $4 billion in the August 2012-July 2013 period, which is up by 8 per cent from corresponding yearago period. Norton’s report is one of the largest global studies investigating the imp-act of cyber crime on consumers.
It is based on self-reported experiences of more than 13,000 adults across 24 countries, including 1,000 adults in India. Explaining the cost part, Symantec Corporation Country Sales Manager India (Consumer Products & Solutions) Ritesh Chopra said: “This cost is based on the amount spent by a user on replacing hardware or software as well as data after he/she has has been subjected to a cyber attack.”
Today cyber criminals use more sophisticated attacks, like ransomware and spear-phishing, which yield them more money per attack than ever before, he added.
With 66 per cent of Indian consumers using their personal mobile device for both work and play, this creates entirely new security risks for enterprises as cyber criminals have the potential to access even more valuable information, Chopra said.
The report reveals that India is among the world’s top five countries with the highest number of incidences of cyber crime like ransomware, identity theft  and phishing.
“India appears to be the ransomware capital of Asia Pacific with 11 per cent victims of this form of virtual extortion,” the report said.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy

Credit Sudhaar's Product CS Identity Shield helps to protect individuals from various types of Identity theft and cyber crime. 

Courtesy : Deccan Chronicle

Tuesday, 22 October 2013

How The 45 Million Dollar ATM Heist Poses Danger To India's IT Industry

Mumbai/Bangalore: A breach of security at two payment card processing companies in India that led to heists at cash machines around the world has reopened questions on the risks of outsourcing sensitive financial services to the Asian nation.
Global banks that ship work to be processed in India, either in-house or to big IT services vendors, were already under pressure to step up oversight of back-office functions after a series of scandals last year.
Last week, US prosecutors said a global criminal gang stole 45 million dollars from two Middle Eastern banks by breaking into the two card processing companies based in India and raising the balances and withdrawal limits.
"India is exposed in two ways: The threat that the same theft could happen in India and the fact that the outsourcing industry will also get affected," said Arpinder Singh, partner and national director for fraud investigation and dispute services at consultancy Ernst & Young.
The episode is reopening debate on banks sending work requiring a high degree of confidentiality to offshore locations.
"It is the weakest link," said Shane Shook, an expert with US cyber-security firm Cylance Inc who has helped financial firms conduct investigations into some major cyber crimes.
"I think the lesson is they need to pull back on what they've outsourced. When you're giving a third party, the outsourced entity, the ability to access credit limits or cash limits of the consumers you're managing the finances for, you're giving up control that is your fundamental responsibility."
India's 108 billion dollar IT services industry is the world's favoured destination for outsourcing. Over 40 percent of exports by the industry are support services for the global financial sector, ranging from investment bank back-office functions to research, risk-management and processing of insurance claims.
Lured by a tech-savvy English-speaking population and wages that can be one-fifth those in the West, more than three-quarters of global banks have a direct or third-party offshore presence in India.
Indian IT firms, led by outsourcers such as Tata Consultancy Services and Infosys, argue that security breaches are rare.
"I think if you look at the nature of the work we do and how much we do, we've actually had very very few incidents," said Som Mittal, president of the National Association of Software and Services Companies, the industry lobby.
Undercurrent of hostility
Still, any perception that data may be less safe in India is unwelcome for an industry that faces an undercurrent of hostility for taking away jobs in the West, home to most of its clients.
"The threat (to security) is for real, that's for sure," said Parag Deodhar, chief risk officer at Bharti AXA General Insurance, the local joint venture of France's AXA.
"When people don't take it seriously, it doesn't help. People still take information security quite lightly, and they don't address the weakest link, which is the people aspect."
There has been no suggestion that anyone employed at the two card processing firms, ElectraCard Services and EnStage, is involved.
EnStage, incorporated in California but with operations based in Bangalore, handled card payments for Bank of Muscat of Oman, sources have said. Bank of Muscat lost 40 million dollars in a coordinated heist on February 19.
ElectraCard Services, based in Pune, processed prepaid travel cards for National Bank of Ras Al Khaimah PSC (RAKBANK), according to sources. RAKBANK suffered a 5 million dollars coordinated heist at ATMs around the world on December 21 last year, the US indictment said.
Several industry watchers have said payment card fraud is a global problem and is not unique to India.
Two previous cases of hacking into processors of pre-paid debit cards occurred at RBS WorldPay and Fidelity National Information Services Inc, both in the United States. The amounts involved however were less than the losses suffered by the Middle East banks.
The US Federal Bureau of Investigation has said many cases of cyber-crime involving credit cards and bank fraud never get publicised.
"The notion that this will affect outsourcing to India is wrong. There is no relation. There have been bigger frauds at BPOs in the United States," Ravi Sundaram, ElectraCard's head of strategy and corporate services, told Reuters on Monday.
Nevertheless the breach comes after a series of other events that have tarnished the IT industry in India.
Last year, the New York state banking regulator accused London-based Standard Chartered of hiding 250 billion dollars in transactions with Iran and not giving proper oversight to its back office operation in Chennai, India.
That had followed a backlash in Britain after customers of Royal Bank of Scotland and its Natwest unit were left locked out of their accounts for a week due to an inexperienced IT operator in Hyderabad, media reports said.
A US Senate probe last year criticising anti-money laundering controls at HSBC identified deficiencies in work done by its "offshore reviewers" in India, according to media reports.
While plenty of global companies are moving more functions to India, either to outsourcers or wholly-owned "captive" operations, some are moving work back home.
Costs, however, remain an over-riding factor.
"Most banks in US are trying to cut costs because of recession. So they will try to outsource, not just to India but to any other country or any other company," said Nishanth Chandran, co-founder and CEO of E-Billing Solutions, a Chennai-based company that helps merchants process payments.
"For banks, it is completely a balance between security and costs."

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Credit Sudhaar has added a new product in its product line CS Identity Shield which aims to protect individuals from various types of cyber crime and identity theft.

Courtesy : NDTV

Monday, 21 October 2013

Smart Ways To Improve Your Credit Rating

The numerical figures of 700 and above are fast forming a superpower club that determines what job you should get, what EMI on your insurance & loan you should pay, and what should be the interest rate on your loan.
It also helps determine your marriage eligibility, phone number eligibility and limit and much more. Thus, whether you are planning to buy a home, car or any other product, or want to get a new credit card, your credit score has immense affect on your loan processing as also determining the credit limit.
A credit score, in fact, is a 3-digit number that shows numeric summery of your credit health. Such score is derived by credit bureaus by analyzing your credit history. The score usually ranges from 300 to 900 points and higher scores suggest more chance of getting approval of your loans. But what is a good enough score?
"A score above 700 usually suggests good credit management. A person's credit history, in fact, is a record of how he/she has used and managed credit in the past. Every financial transaction in your life involving credit is recorded in your credit history - from your payment history on your credit card, to your history on paying off your car loan, to any suits that may have been filed on you," explains Arun Ramamurthy, co-founder, Credit Sudhaar, a credit health improvement company which aims at helping individuals become credit healthy.
In India credit scores are calculated by credit information companies such as CIBIL, Equifax and Experian.
Ramamurthy says that credit awareness in India has a long way to go. In fact, Credit Sudhaar conducted a survey across 8 cities in India and sampled over 300 respondents, and found out that more than 85% of the respondents were not aware of credit bureaus. Delhi and Pune led the country with 1 out of 4 respondents being aware of credit bureaus. Bur a whopping 92% of respondents were unaware of their credit scores.
Delhi, Bangalore and Pune had more than 10% respondents knowing their score. The survey revealed that 91% of the customers were not aware of the impact of non-payment of credit dues. While a mere 4% had reviewed their credit score in the last 1 year, 98% of the respondents who took the survey were unable to comprehend the report that was shared with them.
This explains why you not only need to know about your credit rating, but also the ways to repair the same. Here are some tips to improve your credit scores:
Check your credit report:
Credit score repair begins with your credit report. Thus, the first thing to do is to request a free copy of your credit report and check it for errors. "In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct. Resolve the errors, if any, immediately with the credit bureau and reporting agency," says Gaurav Wadhawani, co-founder, Credit Sudhaar.
Regular payment of bills:
Many people are still not aware of the fact that as simple as paying bills - even phone bills -- on time can play a very important role in improving the credit score. Your payment history on your credit health report amounts to almost 35% of your total score. So, prevention is better than cure. Therefore, it is important to be consistent with the payment of utility bills. "To have a good score, you need to maintain no late payment status for at least seven years," says Wadhawani.
Pay off a debt:
Another easy method to improve the credit score is by start paying off older loans or debts. Even if the debt amount is small, it is essential to get rid of it by making the payment on time. Minimization of outstanding debt helps to improve the credit score.
Less credit cards and less use:
Although having a credit card can actually help you in being an eligible applicant for loans, however, owning numerous credit cards and making huge purchases with them can reverse the situation. Bad credit scores can be improved by reducing the use of credit cards as well as avoiding having too many credit cards. The ideal would to be use between 10% and 20% or less of the total credit available.
  No credit card default:
Another important measure to improve the credit score is to pay down the credit cards and avoid credit card default. Generally you should try to make the balance of each of your credit card at least 30% below the credit limit. "It is advisable to give preference to paying down the credit cards close to their credit limit at first," informs Ramamurthy.
Timely payment of EMIs
Pending loans and debts put an impact on credit health. Therefore, it is important to pay them back on time. For people bidding to improve their credit score, it becomes all the more important to pay the EMIs on time. If you are responsible and punctual with relevance to your current loan payments, it will surely improve your credit score.
Note that a closed account will still show up on your credit report, and may be considered by the score. Also, canceling a credit card can actually lower the credit score. "Alternatively, a better strategy is to occasionally use older credit cards so the issuer doesn't stop reporting the information to the credit bureaus. Having a long credit history increases and improves the score," says Ramamurthy.
No new credit card purchases:
Applying for a new credit when already incurring a bad credit score is a bad idea. New card purchase will raise the credit utilization, which is the ratio between credit card balances and credit limit. The higher the balance, the more affect to the credit score. Therefore, it is advisable to pay cash during purchases instead of putting them on credit. Lowering balances help improve the credit score.
Seek professional help:
If you have tried your hand at fixing your credit report, but have failed to attain desired results, you can also take the help of a professional or credit repair agencies to improve your credit score.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : Economic Times

Saturday, 19 October 2013

Two Inevitable C’s Of Credit: Character And Capacity

Being credit healthy is the state of being in the pink of health – not your physical or mental health but your credit health. 
While measuring your credit score is a complex process as a lot of qualitative and quantitative factors come into play, there are also a lot of C’s that also plays an important role while presenting your credit report card. 
These five crucial C’s are – Character, Capital, Capacity, Collateral and Conditions. Of these, the first two are of high significance.  Credit bureaus are bang on when it comes to collating your credit scores depending on these C’s alone. 
Let us turn our focus to the two main qualitative prospects – Character and Capacity:
Character specifically refers to the reputation of the individual in accordance to his previous records while dealing with financial institutions. The credit history will divulge enough information that will indicate whether the individual is responsible is dealing with his finances or not. 
Instances of regular repayment of loans, credit cards and other bills indicate that the person is responsible with his money and understands the importance of timely repayment. Hence, he can come out as an honest and reliable person to repay a debt. 
On the other hand, if he lapses on paying his EMIs or is sporadic on paying his bills or is on the verge of bankruptcy, he is definitely tagged as irresponsible in his credit report. Such a person has a very high chance of missing out on the benefits of a good credit score like lower interest rates on loans, easier and faster approval on loans and credit cards, telephone connection, job prospects, insurance premia, rentals and a lot more. 
Therefore, you can see that the credit score is surely influenced by debt collection, bankruptcies, a high debt-to-income ratio, foreclosures and tax liens.
The second important factor is capacity of the individual. Capacity measures a borrower's ability to repay a loan by comparing income against recurring debts. In simple terms, the lender will want to know if you have valuable assets such as real estate, personal property, investments, or savings with which to repay the debt if income is becoming inadequate. This is because a large contribution by the borrower will reduce the chance of defaulting. Lenders look at the potential options that can be seized or taken away in case the borrower is not able to repay the loan. However, collecting of these assets is the last resort taken up by the lender.  
Now that you are aware of the two main criteria, let us quickly run through the other three - Capacity, Collateral and Conditions. Capacity refers to the individual’s ability to repay the debt and the lender will examine his/ hers current salary, living expenses, current debts and any dependents that the person might have. 
Collateral, on the other hand, is the asset that the borrower uses as a security for his the loan that he is applying for like property or a house. In case the borrower is unable to repay the loan, the lender can liquidate the collateral to pay off the remaining balance. Condition broadly means the present economic situation and how it is going to affect the borrower’s source of income. 
As you have become aware of the qualitative aspect of the way your credit is calculated, you can find out how this impacts on the quantitative side of it. Credit score is a numerical expression based on points system ranging from 300 to 900 points. 
If you manage to score between 700 to 900 points then it is a high scoring credit report. And if you find that you are lacking somehow and your credit score is not up to the mark, just avail the services of a reliable credit improvement company. 
If you follow their simple yet astute approach, you will see that within no time your credit score has crossed the coveted 700 points mark. Isn’t that a wonderful feeling – to be a credit healthy person? 
Credit Sudhaar is a credit health improvement company run by professionals who have decades of experience in Credit Analytics and Credit Research.

Courtesy : Yahoo

Wednesday, 16 October 2013

Mumbai resident arrested for biggest online credit card fraud

A 32-year-old man has been arrested in what could be one of the biggest online credit card usage frauds uncovered by the Delhi police. Mumbai resident Raju Tevar was arrested last week after Delhi resident Abhay Srivastava filed a complaint at the Connaught Place police station in April, saying his ICICI Bank
account had been compromised and Rs44,911 debited through his credit card.

The police said this amount is part of the Rs2 crore that Tevar allegedly removed from the bank accounts of 4,500 ICICI Bank credit card customers over the past 18 months. Investigating officers have found data of around 30,000 ICICI credit card customers in Tevar’s laptop, leading them to believe that the magnitude of the fraud could be much bigger.

ICICI bank officials were unavailable for a comment. But investigating officers who contacted the bank said ICICI officials too have received complaints and have instituted an internal probe. “They are baffled,” said an investigating officer. “They are just wondering how this happened for more than a year. We feel that a bank employee must be involved.”

Tevar, who was brought to Delhi on a transit remand, was produced in court on Saturday and has been sent to police custody till July 22.

A class 7 dropout, Tevar survived by doing odd jobs — paying electricity, phone and other utility bills for shopkeepers and households at a nominal charge. “He made payments to Maharashtra district electricity board company and PayTM mobile company using stolen data of ICICI bank credit cards, and pocket the hard cash given by the customers,” said SBS Tyagi, DCP (New Delhi).

Tevar stole most of the credit card information from an acquaintance, Zakir, whom he met through a common friend. Zakir, who is absconding, seems to have got this data with help of an accomplice. “Either Zakir’s girlfriend or some close friend works in ICICI Bank, who has helped him in stealing data from the bank’s database,” said an officer.

“Tevar learned to use a laptop in Zakir’s company and then learnt that Zakir is involved in internet banking fraud,” said Tyagi. Tevar stole ICICI Bank customers’ data from Zakir’s laptop and started cheating customers on his own.

“After three months of investigations, we traced Tevar to Mumbai,” said an officer.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Credit Sudhaar's new product CS Identity Shield helps you to protect from various kinds of identity theft.

Courtesy : DNA

Tuesday, 15 October 2013

Indians more willing to share personal info than others: Study

MUMBAI: Even as cases of financial fraud are dotting cyber space across the world, Indians seem more forthcoming in giving out their personal information for personalised services and simplification of finance management than their global counterparts, a study by Cisco has said.

According to the Cisco report, 72% of respondents from India said they would provide more personal information to simplify management of finances compared to 56% participants agreeing globally.

The study, conducted in early 2013, aimed at finding out how and when consumers want to engage with their banks across multiple channels for activities ranging from account monitoring to acquiring financial advice.

The survey included 1,514 consumers and 405 bank professionals across 10 countries — Brazil, Canada, China, France, Germany, India, Japan, Russia, the UK and the US.

However, Indian respondents are also concerned about security of their accounts, as 92% of them indicated they wanted fool-proof security against identity theft as part of more personalized financial services.

About 95% said they wanted advice to increase their savings, 89% requested more financial education, and 72% wanted an assessment of their financial status as compared to other clients as part of the personalized offerings.

"Technology is driving all sectors including banking and financial services. As indicated by our findings, consumers today are willing to exchange private information for more personalized services," Cisco director (Business Development) Shashank Luthra told PTI.

However, the crucial factor here will be to offer these services in a secure environment to ensure that customer gets the best service without any of his personal data being compromised with, he added.

Recently, security breaches at two Indian payment card processing companies in a $45-million global ATM heist sent ripples through the IT security world.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Credit Sudhaar's product CS Identity Shield protects against various Identity theft. This can help the individuals to safe guard their financial as well as personal assets and documents. These practices can help in improve credit score as well as credit health of the Individuals.

Courtesy : Times of India 

Saturday, 12 October 2013

Types of Identity Theft

There are several types of identity theft. Knowing what to do if you are a victim of identity theft starts by knowing what type of identity theft you are dealing with.

Financial Identity Theft

When we hear the words "identity theft" we usually think of credit reports and bank accounts. This is called financial identity theft. We hear about data breaches like TJ Maxx (47.5 million credit cards) and Heartland Payment Systems (130 million credit cards) regularly. Our faith in our financial institutions is shaken. Some of us are thinking about stuffing our money in the mattress again. If an identity thief gets access to your bank account, you will want to read up on the Electronic Funds Transfer Act (EFTA)

Insurance Identity Theft

Your Guide has identified insurance identity theft as a "new" type of identity theft. Although the problem has always existed, it presents specific problems for the victim that must be addressed independently from other types of identity theft. Of course, all types of identity theft have the potential (or even likelihood) of bleeding over into other types. Generally speaking, insurance identity theft tends to be a concern when you are a victim of medical identity theft, and could also show up as financial identity theft.

Medical Identity Theft

The World Health Organization said this is “the information crime that can kill you.” (Read the full publication here (PDF).) It’s not just the most dangerous form of identity theft, it’s also one of the hardest to fix. There are very specific areas you will want to look into when you are a victim of medical identity theft, and they are in general vastly different from dealing with any other type of identity theft.
(As a side-note, there is a lot of misinformation concerning the the Medical Information Bureau (MIB) when it comes to medical identity theft. Keep in mind that, despite the name of the organization, MIB Group has almost nothing to do with medical identity theft – although if you are a victim of insurance identity theft you may want to consider checking your free MIB report.)

Criminal Identity Theft

Criminal Identity Theft is just as difficult as medical identity theft in terms of resolving the problem. Like medical identity theft, criminal identity theft has a way of coming back to haunt you, even after you think you have the problem taken resolved. The easiest way to find out if this has happened to you is to get caught speeding. The officer who stops you will run your license and registration. If there are warrants out for your arrest, s/he will give you a pretty set of matching silver bracelets, and free public transportation.
For an example, watch this video from CBS4 in Jacksonville, FL.

When dealing with criminal identity theft, expect a lot of skepticism. Police are told “It wasn’t me” almost every day. It's also worthwhile to know that many states now have specific laws in place to address identity theft.

Driver’s License Identity Theft

This may be the easiest form of ID theft to commit. Your purse/wallet gets stolen, and your driver’s license gets sold to someone who looks like you. Then it’s easy for them to get other forms of ID in your name. This type of ID theft spreads to others, especially criminal identity theft.

Synthetic Identity Theft

This is the “latest thing” in the ID theft world. The thief will take parts of information from many victims and combine it. The new identity isn’t any specific person, but all the victims can be affected when it’s used. It will show up in the areas above, so look to those sections for additional information.
Synthetic identity theft has also been used to describe any act in which the criminal attempts to convince someone they are another person, real or fictional. This careful wording is no doubt reactionary to the the US Supreme Court ruling that an illegal immigrant has not committed a crime unless he/she knew they SSN they were using belonged to an actual citizen.

Child Identity Theft

Our kids are a big target for identity theft. Child Identity Theft has become a serious concern in recent times, and there are a lot of articles giving widely varying advice concerning the matter. From a practical standpoint, an 8-year-old won’t be looking at his or her credit for at least eight more years, when they decide to get a car and insurance. Sadly, in these cases it is almost always a friend or family member who commits identity theft. This means the parents will usually not want to press charges, and the identity thief counts on that.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Credit Sudhaar has launched a new product in its product line CS Identity Shield whose main aim is to protect the individuals againts various identity thefts.

Courtesy :

Friday, 11 October 2013

Banks to pay for credit card frauds, RBI says

MUMBAI: The Reserve Bank of India has refused to extend the deadline for upgrading security on credit card swipe machines and has ordered banks to compensate cardholders in seven days if any fraud occurs on non-compliant terminals.

If the bank fails to refund the disputed amount in seven days, it has to compensate the cardholder with a penalty of Rs 100 per day until the date of payment. At present, dispute resolution is a cumbersome process and takes several weeks in case of credit card frauds.

Banks see the new directive as indicative of the central bank's seriousness on card security. After a rise in credit card frauds, the RBI had asked banks to add security features including an electronic chip and a secret PIN which the cardholder is required to punch in the terminal to authenticate payment. This feature was to come in force from July 1. But banks were behind schedule in both issuing chip cards and in upgrading terminals to meet the new security standards.

Since the entire industry was behind schedule, the RBI was forced to extend the deadline. Banks were required to get credit card swipe machines upgraded by September-end and have all the cards upgraded by November. But a few days ahead of the September deadline, banks have again said that they are not ready.

"Various banks have approached us, seeking further extension of the time line of September 30, 2013 for complying with the task of securing the technology infrastructure," the central bank said in a statement.

Pointing out that banks were told that there would be no further extensions, the RBI said, "It has been decided not to grant any further extension of time. Accordingly, banks not complying with the requirements shall compensate loss, if any, incurred by the cardholder using card at POS terminals not adhering to the mandated standards."

There are usually two banks in every credit card transaction. One that issued the credit card and the other that has installed the swipe machine. The RBI has said that the card issuing bank should ascertain in three days whether the fraud has taken in a non-compliant machine and within seven days refund the money to the card holder. The card issuing bank will in turn recover the money from the bank which has installed the swipe machine.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : Times of India

Thursday, 10 October 2013

Rise in credit & debit cards spending signals India's transformation into a cashless economy

For Vijendra Rawat, 42, it has been a long journey from cash to card. When he started working in the early 1990s, almost all his expenses were in cash. Debit cards were not that popular then and the credit card was still a very niche product. It did not help that very few outlets - from grocery to milk to utilities - willingly accepted card payments. It is different today.

In close to two decades, Rawat - now a Delhi-based businessman - barely deals with cash and cannot do without his cards. He owns two credit and two debit cards and with time has figured out the best way to use them. He uses his debit card mostly as an ATM card to withdraw cash.

For almost all his expenses - from buying milk, petrol to even consumer electronics and durables - he uses his credit cards. He rarely shops for any big-ticket items between the 1st and 11th of the month. "I want to enjoy the full month's credit period," he says. And he never revolves his credit, settling his credit card bill at the end of every cycle. "If I cannot pay I do not buy. Simple," he says.

Yes the economy is sluggish. Credit offtake has slumped. And consumer sentiment is low. Yet, electronic cards — debit, credit and pre-paid cards — are posting robust growth. Between 2007-08 and 2012-13, the number of cards issued (except credit cards) has risen. From a small base of around 150 million in March 2008, electronic cards are nudging the 400-million mark today.

More impressive is the secular growth in volume and value of transactions. Credit card spends (in value terms) have more than doubled to Rs 1.23 lakh crore despite a dip in the number of credit cards between 2007-08 and 2012-13. And debit card spends (in value) have risen six times to Rs 74,400 crore during the period. The number of processing terminals too has doubled to 9.5 lakh in these five years. "Where is the slowdown? Our business is doing well. We are upbeat," says Uttam Naik, head (South Asia), Visa Group

India Warms up to Cards

What Naik doesn't tell you is that this robust growth in electronic cards isn't a reflection of perked up consumption. Rather, it is more a reflection of a bigger shift - of India slowly moving from cash to a cashless economy. Today there are close to 350 million debit cards and 19 million credit cards in India. Almost all Indians with a savings account have a debit card.

But they mostly use it as an ATM card. According to Ari Sarker, India country head, MasterCard, Indians withdrew $330 billion of cash from ATMs in 2012. But the ratio of annual transactions to the number of debit cards is just 1.2. Credit cards have had a rollercoaster of a journey - both for consumers and banks.

Till 2008, there were 27.55 million credit cards in India. With the economic boom, aggressive banks including ICICI chased customers and issued credit cards indiscriminately.

But after the 2008 economic crisis, it began to hurt. About 70% of the credit card outstandings were being revolved by customers. At its peak, one in four customers turned NPA then. Banks like ICICI restructured their credit card business and some like Deutsche Bank, Barclays exited the business altogether. Naik of Visa estimates that over Rs 5,000 crore of bad credit card loans were written off by banks in 2009.
  Some 10 million credit cards in circulation then were cancelled by the banks. Both the banks and customers have since turned wiser. Most banks, led by ICICI, have restructured their credit card strategy. And, like Rawat, more and more customers have become smart users. Just about 30% of the credit card spend is being revolved today and a large chunk of it is in the EMI schemes that banks have launched with companies. NPAs too have fallen from a peak of 25% to under 5%.

Usage & Consumption Trends

So what do we know about electronic card users and usage in India? According to MasterCard, 75% of all card payments are concentrated in the top 20 cities with Delhi, Mumbai and their sub urbs alone accounting for 43%.

Credit cards have a higher share in the discretionary category whereas debit cards dominate in routine expenses like utility payments. About 30% of credit card spends are being done online. At least 10-15% of customers use their cards only online, many from smaller cities. A Visa study reveals that people in the monthly income band of Rs 75,000-100,000 are the most prolific users of electronic cards.

Electronic payments dominate their expenses: rail/airfare (71%), durable goods (61%), rent (49%), tele/mobile (47%), medical institutions (46%), clothing/footwear (44%), beverage and refreshments (35%).

The top five items in household expenditure that have the highest noncash component are clothing and footwear (12%), rent (11%), electricity (4%) and beverages (3%). Bangalore leads other metros in higher usage of cards. While petrol, telecom, consumer durables, jewellery remain one of the fastestgrowing categories for debit and credit cards, new categories like insurance premium too are gaining steam.

While debit cards have had a staid and steady growth in India, credit cards have undergone a structural evolution. The journey of ICICI Bank mirrors these changes well. In 2008, the bank had a 28% spend share in credit cards. Post-2008, it has deliberately trimmed its business and in 2012 had just an 11% spend share.

ICICI Bank has become selective about its new credit card users with 80% of them being existing banking customers. The bank uses the credit scores of Cibil, a credit rating body for consumers, to vet new customers. ICICI Bank has also substantially rationalised co-branded offerings and trimmed the range of products.

For example, from a high of 15 co-branded cards, the bank now has just two major co-branded cards, with HPCL and Jet Airways. "We realised that the largest spends for our customers were on fuel and travel," says Rajiv Sabharwal, executive director, ICICI Bank.

As part of the new strategy, lifetime free credit cards, so popular in the pre-2008 days, have largely been phased out. Most of their new credit cards come with an annual fee that could vary from Rs 500 to Rs 1.25 lakh. The thrust for banks has shifted from chasing quantity to quality customers. Their new launches, rewards programmes and incentives are structured accordingly. ICICI claims that its diamond credit card has best-in-class offerings unmatched by any.

  IndusInd Bank, which bought Deutsche Bank's credit card business, has 2.5 lakh credit card customers and "focuses on the upper end of the credit card business", says Anil Ramachandran, head of IndusInd's credit card business. Its Indulge credit card has a 22-carat gold inlay to give the card a distinctive look and appeal.

Strictly by invitation and with an annual fee of Rs 1 lakh, its customers can hire a yacht, super car or a chartered flight at a discount. The card also has a panel of chefs who can serve up a fancy private meal for 5-10 people for its customers. "There is a premiumisation in the credit card business," says Visa's Naik. According to Visa data, spends on Visa Classic, an entry-level credit card, have gone down from 47% in 2010 to 20% in 2013. Visa Premium has gone up from 52% to 74% and Visa Super Premium has risen from 0.6% to 5.7% today.

The India Journey

Debit cards far outnumber credit cards in India, a global trend. But the sharply skewed ratio — 350 million debit cards to 19 million credit cards — may be unique to India, says Naik. With a vast majority of the population at the bottom of the pyramid, credit cards will remain beyond the reach for a majority for a long time. The internet is proving a timely catalyst for an increase in card usage. Growing popularity of online shopping is automatically pushing lot of spends online. In fact a third of all spends on Visa cards in India today come from e-commerce. This segment is expected to surge as e-tailing grows.

The rising sales of smart phones and tablets will help sustain the momentum. "In the West, e-commerce is growing due to convenience. In India, it is growing because it provides accessibility," says Jairam Sridharan, president consumer lending, Axis Bank. While still very small, mobile card payments should take off in India in a big way, thanks to a slew of innovations in low-cost hand-held mobile swipe devices. Naik of Visa says a mobile device costs almost a third of conventional swipe machines that use leased lines. Globally, mobile swipe devices are becoming popular among self-employed workers like cab drivers.

In India, mobile network swipes were allowed just five months back and today there are already around 20,000 in operation. One of the big hurdles in the growth of card payments in India is poor penetration of terminals. Today there are 9.5 lakh terminals in the country that can process electronic transactions, almost double the 2007-08 number.

That figure should double again in under three years. This will get further catalysed by mobile swipe devices. This shift from cash to cards is part of a larger trend playing out globally. It is a shift that governments and banks are actively encouraging.

Welcome to a Cashless World
In 2008, of the $27 trillion spent on global retail purchases, 9.5% was spent by cheques, 42.2% by cash and 27.4% by cards. In 2012, on a total retail purchase of $30.32 trillion, cheque and cash transactions have declined to 7.7% and 38.3% respectively while card payments have increased to 32.8%, according to Moody's Analytics.

From e-commerce to mobile payments — enabled by cheap and secure technologies like mobile swipe devices — electronic transactions are growing. India is late to this cashless world. A high 96% of all transactions (in volume terms) in India still are conducted in cash, according to a recently released Visa report.

While the share of electronic payments in non-cash payments is rising, cheques still dominate, although it is falling. Between 2009-10 and 2011-12, share of cheques came down from 65% to 52%. But there are reasons why the Indian government would want card payments - in volume and value terms - to rise. One, the cost of printing currency itself is high. In 2009-10, according to the Visa report, the RBI incurred an annual cost of Rs 2,800 crore to just print currency notes.

This does not include the cost of storage, transportation, security, detection of counterfeits, amongst others. The cost of printing and maintaining this extensive amount of cash alone costs the country about 0.2% of its GDP, says the report.

According to Moody's Analytics study based on 2008-12 data, the growth in the use of electronic cards - which moves money efficiently and smoothly in the economy - added $1.5 billion to GDP. It also says that a mere 5% annual growth of cashless transactions saves India over Rs 500 crore annually. Not to forget that all electronic transactions get captured within the banking system and hence boost transparency and generate additional government revenue through tax.

Thrust on Consumer Safety

Not surprisingly, the RBI is doing all it can to push card growth. Its recent ban on 0% EMI schemes - a popular initiative among consumer companies - in a quest for transparency may appear contradictory to this resolve. But it may well not be. Here's how the schemes worked. On purchase of a costly product with credit cards, many companies collaborated with credit card companies to offer a scheme whereby customers can pay back in 6-12 equal instalments. In 0% EMI schemes, typically there are hidden costs (like a processing fee) that banks charge and customers do not know about. Also, often gullible customers are not told of the cash discounts that they would have got had they bought the product by paying cash.

The RBI wants banks to provide full disclosure to the credit card customers and help them take an informed decision. The RBI directive - just ahead of the festival season - may have come at the wrong time. For both credit card companies and consumer durables/electronics firms, the scheme helped bring additional business.

A senior banking sector executive estimates that during peak season the credit card companies' business exposure to EMI-led schemes would be 10-15%. "Our exposure is minimal. It will be a challenge for consumer companies," the bank executive said on condition of anonymity. For the consumer durables industry, the exposure to EMI schemes could be as high as 30%, says Shantanu Das Gupta, V-P (corporate affairs), Whirpool India. "But our exposure is under 10%. The impact for us is minimal," he clarifies.

Whatever the extent of impact, there is no denying that the banks and companies will feel the heat and they will have to figure out new marketing gimmicks to push sales this Diwali. The RBI is also pushing for more secure card transactions as instances of card frauds rise in India. In 2011, it had asked banks to add another layer of security and introduce a secret PIN that card users must punch into the terminal to authenticate payment. After many deadlines and delays, this directive will finally come into force next month.

While the banks are still not fully prepared, the RBI has ordered them to compensate cardholders in seven days if any fraud occurs on non-compliant terminals. And if the bank fails to refund the disputed amount in seven days it has to compensate the card holder with a penalty of `100 per day until the date of payment. Right now, dispute resolution is a cumbersome process and can take several weeks in case of credit card frauds.

Consumers Watch Out

While the RBI is doing all it can to protect card customers, users too must be cautious, particularly credit card customers. As the economy slows down and news of layoffs hit headlines, credit card outstandings are expected to rise. "It is time to be more cautious. The pace of growth [for the industry] is likely to moderate as layoffs hit headlines," says Sridharan of Axis Bank. With credit bureaus like Cibil and Equifax around, increasingly more and more institutions and service providers - like telecom, insurance and even employers - are using credit scores as part of background checks on individuals. Arun Thukral, MD, Cibil says today it has a memberbase of 1000 companies and a customer database of 300 million.

Spotting opportunity, Arun Ramamurthy has cofounded Credit Sudhaar, a company that helps Indians improve their credit scores. Founded in 2010, it is growing rapidly and today has a presence in eight cities with over 6,000 clients. Recently, a Hyderabad-based BPO executive came to Ramamurthy desperately seeking help. He had Rs 10,000 outstanding in his old credit card bill which he had not settled and it had grown to Rs 56,000.

With a poor credit score, his new employer rejected him. "We helped him settle the debt and improve his credit score," he says. Similarly, a 31-year-old private sector bank executive came for help as he had to forego his promotion due to a background check that revealed a poor credit score. He also had as a client a father whose son's admission to a top Delhi school was rejected because of an error in his credit report that resulted in a poor score. "We had to work with the credit bureau to get the error rectified," he says. But that may well have been a lesson for the father to keep a closer tab on credit card spending and payments.

Credit Sudhaar is India's first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.

Courtesy : Economic Times