Two years ago, a 20-something Ayushi Patel got a call from a direct selling agent of a large private bank, offering her a “free” credit card. She instantly agreed to sign up. Today, she owes the bank more than Rs1 lakh, the bulk of it in the form of interest. For sometime now, Patel has been trying to get out of the debt trap, but does not know how to go about it.
Now, thanks to the banks themselves, help might be at hand at a new financial web portal, www.money4you.in.
Indian Banks’ Association (IBA), the country’s premier banking body, has teamed up with Mastercard Worldwide and India Cards Council, to launch the portal on 9 May 2007.
The portal aimed at helping customers plan their monthly budgets to calculate equated monthly instalments (EMIs) on loans from banks. The website will also offer credit education and tips on wisely using credit cards.
The website’s section on family finance talks about savings, giving tips such as the need to set aside at least 5% of one’s salary for savings and how to budget for daily expenses on everything from groceries to dining out.
If all these do not address the queries of the consumer, there’s an interactive session she could opt for. The portal has an online financial wizard christened “Mr Mani” to offer answers to queries.
Though some foreign banks as well as private banks in India have similar websites, this is the first instance of a portal being launched by the industry group.
The site can also be accessed through the association website (www.iba.org.in) as well as websites of all its 150 member-banks.
“There are about 40-50 million online customers who need simple financial advice on a daily basis. This initiative is a small step in creating greater consumer awareness and help them make informed decisions on financial matters,” said H.N. Sinor, chief executive of the association. The association also plans to reach rural consumers with booklets printed in regional languages.
Nitin Gupta, general manager, South Asia for Mastercard Worldwide says, “The exercise was initiated a couple of years back when the Reserve Bank of India (RBI) set up a cards working group to examine the disbursal of credit. Rising delinquencies are a part of any growing economy, but cards are a convenient purchasing tool if you know how to use it.”
Mastercard worldwide has similar education portals in other countries including the US, Taiwan, Australia and China.
There are more than 200 million credit card users in India and the number is growing. However, the central bank has, on several occasions, expressed concerns over the growing rate of default rates on credit cards. In January, it increased provisioning to 2% from 1% on credit cards and personal loans. This means banks need to set aside more money if they want to expand their credit card business.
“India continues to be one of the highest growing markets for credit cards and I do not think RBI has any objection to that,” says Gupta.
“We are making efforts to educate consumers on the availability of credit.”