The credit cards industry is showing revival signs with a spate new cards being launched and delinquencies written off by banks
The credit cards industry which was in doldrums since 2008 global economic crises is showing signs of revival, with a spate new cards being launched and delinquencies written off by the banks. SBI Cards, the country’s third largest issuer of credit cards, is targeting addition of one million credit cards to its current portfolio by 2014-15. According to the company, the rise of the credit bureaus is factoring its growth rate and tracking the recovery phase.
“The delinquencies are coming down mainly because customers are conscious about their credit card usage owing to credit bureau records. People are aware about the usage of credit cards. The average industry delinquency is about 4%-5%. We are lower than that. There is lot of consolidation in the industry. There is significant reduction in the issuance of the cards from past three years. Though from our perspective we have continued the issuance of cards and are bullish on the market,” said Kadambi Narahari, chief executive officer, SBI Cards—a joint venture between State Bank of India and GE Capital.
Recently, the HSBC Credit Card Monitor Survey revealed that the number of credit card holders in India declined to 21% from earlier 23% but the number of premium card-holders rose to 29% from 18% in 2011. According to a media report, HDFC Bank, has increased its credit card business to Rs14,259 crore during March 2012 quarter from Rs11,490 crore in same period last year. Kotak Mahindra Bank’s new cards acquisition has grown by 30%-40% in past three to four years. Earlier this week Citibank India launched its “Citibank PremierMiles Credit Card”, an airline agnostic card to tap the credit card business in the growing air travelling space.
Besides relying on credit bureaus on verification before issuing cards and reducing delinquency, SBI Cards also encourages people to convert their card spend into EMIs (equated monthly instalments) with attractive interest rates. “People feel comfortable to pay the amount in EMI. This helps us to reduce delinquency. Today our EMI portfolio is growing. It’s close to 30% of our total outstanding payments,” explained Mr Narahari.
According to the company, change in the customer attitude, emergence of retail and Internet, mobile commerce, rapid increase in terminalisation, which is expected to rise four times by 2014, will together result in increase in the number of credit cards and average spend on it. Currently SBI Cards has a total customer base of 2.1 million, out of total 17 million customers in the industry, with asset size of Rs2,300 crore and foot print in 50 Indian cities. It has around 13% of the current market share.
The company has various cards to its portfolio. It includes SBI Platinum Card, SBI Gold Card and SBI Secured Card, which is offered to SBI’s fixed deposit customers. It also had co-branded cards SBI Railway Card, in association with IRCTC, SBI SpiceJet Card and co-branded cards with Oriental Bank of Commerce, Karur Vyasa and Bank of Maharashtra. It offers 14 payment options to the customers.
SBI Cards is also aiming to expand in Tier II and III cites. Mr Narahari says that, “We have identified 50 such cities. Once we complete detailed verification. We will be ready to roll out, which could be similar to the expansion of FMCG companies. Three years from now we think Tier II and III cities would be about 20% of our total portfolio. This is will outpace Tier I in terms of growth rate.”
He also said that the currently the Indian credit card market interpenetrated. SBI Cards has adopted a 360 degree approach on grievance redressal. It is focusing on the usage of social media such as Twitter, Facebook and SMS channel apart from the traditional call centre based system of handling customer complaints. Mr Narahari says that, “On an average we resolve 30-40 consumer complaints posted on our Twitter handle and Facebook page.”
The Hazard Centre’s own observations on the BRTS corridor suggest that there is huge inconvenience being caused by the CRRI experiment to bus commuters, pedestrians, and cyclists, who are emphatic that the BRT corridor must be retained and have several suggestions for how it may be improved….
(Buses ply on the road as commuters are stuck in a traffic jam on BRT corridor stretch in New Delhi)
A typical criticism of motorcar-centric perspective as though the people traveling speedily in the buses are not commuters. The “traffic jam” in the direction of flow of BRT buses is actually at the signals while one can feel the movement of traffic in the opposite direction. You have read the numbers in Part I of this article. Now read on.
Bringing forward essence of Part I of the Saga of Delhi BRT (Bus Rapid Transit),
(i) At a frequency of 30 seconds and 30 km/h speed, the gap between two consequent buses in the BRTS will be 250 m while at 20 km/h, it will be 166 m. However, much of this gap may appear to be in terms of distance, in terms of time, in 30 seconds another bus will pass the spot. This means that there is practically no room to put any other mode between two BRT buses without affecting its performance.
(ii) A BRT plying normal buses with 70 passengers bus capacity running at 30 seconds ‘headway’ will carry 8,400 persons per hour per direction (pphpd); while articulated buses with 175 passenger bus capacity at that same headway will carry 21,000 pphpd and bi-articulated buses with 250 passengers bus capacity will carry 30,000 pphpd.
(iii) Mixed traffic on a three-lane corridor will barely carry about 5,000 persons per hour overall including 20 normal buses in one hour at three minute headway.
(iv) In 2008, barring a few, many media went on a vicious campaign against the BRTS first corridor in Delhi; the campaign died down when public transport users’ opinions became public knowledge.
“The Bus Rapid Transit System (BRTS) in Delhi offers an alternative model of transportation providing separate spaces for buses, private motorised vehicles, cyclists, pedestrians and livelihood opportunities. Focusing more on the movement of people rather than of vehicles, giving due right of way for non-motorised modes of transportation, this model promised sustainability of both the transportation system as well as the environment. However, since its launch in 2008, it has faced strong opposition from the car lobby which found its space limited to two lanes on the corridor while the buses sped by on the bus lane. This system also faced severe criticism in sections of the media supporting car users and actually got support from the car manufacturers. While the reporting was negatively biased towards the corridor, its benefits for the larger section of the population and the overall transportation system were not given much importance by the media.
The recent move of the Delhi High Court questioning the feasibility of the bus corridor and the subsequent commissioning of Central Road Research Institute (CRRI) to study the corridor is based on a petition by a Delhi-based NGO, purporting to represent auto-rickshaws, contending that the “traffic in the non-bus lane was moving at a snail’s pace” and demanding that the ‘empty’ bus lanes be opened up to all other motorized vehicles. Such an approach does not question the role of cars in the first place for creating congestion and whether their removal from the roads would not make things much better! While the study of the BRT corridor by CRRI is to be welcomed to assess whether the BRT has achieved its original objective of making travel easier for the larger section of commuter population (only 12% use private motorised vehicles in Delhi), it is important to revisit the existing findings of research conducted by various independent agencies who have studied the corridor from various perspectives. Some of the studies regarding BRT in Delhi are listed below. The compilation of these can be read at Hazards Centre website:
It was the Delhi-based NGO Hazards Centre’s initiative in writing a letter, signed by near about 110 concerned knowledgeable individuals in 2008 that lowered the tempo of media viciousness against BRTS. Interestingly, Times of India Ahmedabad edition has been a great admirer of the Janamarg BRTS introduced in Ahmedabad in 2009.
In response to recent onslaught by Times of India, and the experiment CRRI carried out in the second week of May 2012, Hazards Centre backed by 77 concerned knowledgeable individuals (urban planners, transportation experts and eminent citizens) shot off an appeal on 27 April 2012 to CRRI and other authorities, protesting against the experiment to be carried out by CRRI from 30 April 2012 on the BRT Corridor, prior to commencement of the week-long experiment by CRRI. The commencement of the experiment was postponed by a week.
Subsequently by another letter sent on 2 May 2012, CRRI was requested to put the rescheduled “trial run” from 12 May 2012 to 17 May 2012 on hold, appealing to them to use their authority to put a stop to any “trial run” or ‘experiment’ which places the bus lane on the left of this corridor on the grounds that it violates the directions of the Delhi High Court as well as the Terms of Reference (TOR) issued by the Transport Department.
CRRI was further written to on 10 May 2012 informing them how the premature release of the “findings” of the study by CRRI had prompted major violations all along the corridor, without any penal action whatsoever being taken by the police, against the local goons threatening the Delhi Integrated Multi-Modal Transit System (DIMTS) employees trying to bring some order. CRRI had been cautioned that the entire set of Supreme Court mandated objectives of controlling pollution and reducing congestion through restrictions on use of private cars, and promoting public and non-motorised transport was being defeated by the willful neglect of the police, the transport authorities, and the local administration.
Hazards Centre adds in their recent letter “You have consistently ignored these letters and not made any attempt to intervene in a completely unscientific enterprise, and thus provoked further social anarchy on the BRT route. If any evidence is required for this it lies in the destruction of parts of the BRT corridor by the petitioner in the high court who appears to have taken the law into his own hands, as reported in the Times of India (14 May 2012), as well as from a reading of the order of the high court dated 11 May 2012 which reads, “If the CRRI feels that the suggestion of the applicant is justified and the removal of concrete divider at a distance of 300 yds from the traffic signal is imperative for this purpose, CRRI is free to do so”. Thus, his (petitioner) claim, that his power to destroy the dividers flows from the high court, has no basis in fact. Even CRRI has issued a denial on 13th May to the commissioner, Transport, Delhi Government clarifying that “this institute is no way responsible for the above-mentioned demolition of the physical infrastructure done by any third party on the BRT stretch”.
Hazards Centre goes on to say “Our own observations on the corridor suggest that there is huge inconvenience being caused to bus commuters, pedestrians, and cyclists, who are emphatic that the BRT corridor must be retained and have several suggestions for how it may be improved…”
It is hoped that the fuel price hike will give impetus to rational thinking amongst policymakers and politicians on the one hand and planners on the other. They cannot be LLTT i.e. Looking at London and Talking to Tokyo, so to say—talk of improving public transport and do precisely contrary by providing newer facilities to user of personal motorized vehicles.
(Sudhir Badami is a civil engineer and transportation analyst. He is on Government of Maharashtra’s Steering Committee on BRTS for Mumbai and Mumbai Metropolitan Region Development Authority’s Technical Advisory Committee on BRTS for Mumbai. He is also member of Research & MIS Committee of Unified Mumbai Metropolitan Transport Authority. He is member of the Committee Constituted by the Bombay High Court for making the Railways, especially the Suburban Railways System Friendly towards Persons with Disability (2011- ). He can be contacted at [email protected])
The six principles involve ensuring the basis for an effective corporate governance framework, the rights of shareholders, equitable treatment of shareholders, role of stakeholders in corporate governance, disclosure and transparency, and the responsibility of the boards
Mumbai, May 25 (PTI) Market regulator Securities and Exchange Board of India (SEBI) on Friday said it is in talks to keep the domestic corporate governance norms aligned with the global standards ratified by Organisation for Economic Co-operation and Development (OECD), reports PTI.
Paris-based OECD, an international grouping of top economic powers, has ratified six 'Principles of Corporate Governance', which have become a benchmark for policymakers, investors, corporations and other stakeholders worldwide.
"SEBI is having bilateral talks with OECD for keeping the corporate governance aligned with six fundamental principles ratified by OECD," SEBI Whole-Time Member Rajeev Kumar Agarwal said.
These six principles involve ensuring the basis for an effective corporate governance framework, the rights of shareholders, equitable treatment of shareholders, role of stakeholders in corporate governance, disclosure and transparency, and the responsibility of the boards, he said.
Speaking at a seminar organised by NSE in association with the National Institute of Securities Market (NISM) and BSE on corporate governance, Agarwal also called upon all the stakeholders to generate trust by displaying robust corporate governance practices.
He further said SEBI had last year held policy dialogue with OECD on 'Minority Shareholders Protection: Related Party Transactions' and it was attended by all stakeholders.
"We expect to have many such initiatives for the development of corporate governance standards in India," he added.
OECD was originally set up as a block of the American and European economic powers in 1960, but has started working with emerging giants like India, China and Brazil over the years.
Stating that the investors interest are being protected, Agarwal said trust is the most important element.
"We have to generate trust by displaying the corporate governance," he said.
Agarwal also expressed hope that the once the proposed Company Bill is passed by the Parliament, it would further strengthen the legal framework for corporate governance.
"The proposed new Company Bill also contains certain provisions pertaining to corporate governance," he said.