Credit Cards in India

With the e-commerce sector in India booming, a lot of foreign investors are looking to invest as PE funds in Indian e-commerce ventures. Unlike the Indian outsourcing story, wherein the business is a case of derived demand, the e-commerce stories are catering to the domestic market. With different reports sizing this industry around 5000+ Crores in INR per annum, this is one of the moments in the India Shining dream. One of the major factors in driving this has been the credit card and personal finance industry in India.

The ease with which private banks are issuing credit cards is a testament to the process orientation of this industry. What unnerves me about this is that the same ease is shown when the same credit card user switches to a different card. Over a period of time, users wake up to this and start becoming consumers … demanding better deals on their cards and switching without a moment’s hesitation. What this results into is an easy way out to avoid paying one credit card and get access to another card. Yes … a credit card fraud. The first world nations have already faced this threat and have put up centralized agencies to monitor credit scores.

In the UK, you can do a credit check for free … and that too online. The thing is that such organizations have superior processes powered by reliable and cutting edge technology. Nowadays, I am reading about Credit Cards with Digital Displays. In fact, in the UK the industry is so mature that nation level reporting can be done to find out the country’s credit risk. There are 30 million UK credit card customers holding 66 million cards. Out of these, 62% of all UK adults had at least one credit card. What is great about this is that the government is keenly following this industry and has mandated to the credit card industry to clean-up all malpractices.

India, is still far behind it n these matters … we do have the Credit Information Bureau (India) Limited, but I tried getting a report online and I could not. I had to first make a payment of INR 470, at which I balked. I mean, shouldn’t this data be made available for free? At least to the user on whom its about!

The Credit Card industry in India needs to mature and fast! Otherwise the boon which is fuelling the start-up boom can suddenly become the bane of financial institutions. Proablems such as credit fraud and CIBIL look-ups for all credit related transactions should be institutionalized across the country. Private banks need to stop running after numbers and start working on how to reduce churn. Business analysts need to figure better predictive models for detecting possible frauds (ala Minority Report).

The credit card industry in India is still in the nascent phase, with rural areas still vastly unexplored, there is a huge scope of growth and this industry does require the support of the country to grow. Personal finance will increase personal funding … which will fuel the country’s GDP … reducing the Balance of Payments (BoP) … increasing the Rupee value. An aggressive consumerist movement can give this economy a shot in the arm, and the credit card industry is just winding up for that!