Saturday, July 29, 2006

Citibank's 'EMI' offer

Banking is an old world industry that has embraced new technology whole heartedly. The revolution started with ATMs, then came net banking and now banks have become cell-savvy.

This is mostly a good thing. ICICI Bank will sms you when a cheque is cleared and your account gets credited. There are other great things you can do under 'mobile banking services' including balance update, cheque book request and details of last 5 transactions, among others.

Then there are the credit card companies. Citibank will alert you if your credit card bill is due and still uncleared. And within minutes of making a high value transaction, the Citi call centre in Chennai will ring and confirm the owner has used the card. At least in case of a card being used thus for the very first time - thus reducing the possibility of fraud.

But there can be too much of a good thing. The other day, I made a purchase of a mere Rs 3046 and a couple of days later got this sms: 'Convert your purchase into 12 EMIs. EMI : Rs 279; Fee Rs 150. Diminishing Int. Rate: 18%. Reply 'DEMI' to convert."

Sounds really desperate to me - on the part of Citibank. You spam all your customers in the hope that a few are dumb enough or poor enough to respond to a dud offer. I guess even if the acceptance rate is 0.1 % - because all you need is a pea brain and a single SMS - the bank makes a ton of cash.

But something tells me there are enough such pea brains...

Credit card 'culture'
Like a good number of credit card users in India I use mine as a convenience and pay off the bill in full every month. But that's not good news for banks. They're keen to create a client base of 'revolvers' who pay just the minimum balance every month and interest on the rest. And they seem to be succeeding.

A nearly 5 year old cover story in Business Today estimates that 35-40% of card holders in India now revolve their credit.

Worse (or better, depending on how you look at it), research conducted by the Credit Card & Management Consultancy (CCMC) shows that the proportion of credit card holders revolving credit has increased sharply from 25-30 per cent in 2000 to 35-40 per cent this year.

I'm guessing that figure might be up because in these 5 years a large number of young people have joined the workforce. And they're more careless about reading the fine print than the generation before them. Plus, the 'gotta have it now' culture has only gotten stronger.

Of course we're still better off than say Australia - where only 25% of card holders pay off their card bills every month. Or America, where 115 million people revolve their credit and the average household is $8000 in debt.

The total number of credit cards in India is still just 18 million, which is no 3 in Asia but far behind Japan (85 million cards) and Korea (50 million cards). The very fact that we have 47 million debit card holders vs 18 million credit card holders in India shows we're still resisting the lure of building castles on '18% diminishing int rate'.

But I still think Citibank should not spam me- or any other customers - with 'EMI' offers. Unless I specifically opt in for them. Yeh to gale padne waali baat hai. Kindly let the air we breathe remain interest-free!


  1. Couple with this offers of pre approved personal loans -> EMI on personal loans -> option of giving EMI of personal loan through Credit Card -> Option of paying Credit Card EMIs in EMIs.

  2. Some of the bank had one of their tag-lines as 'We call you bec. we care for you,we don't(call u) for the same reason'--where they had introduced the option of unsubscribing for any kind of promotional calls by the bank(for the customers).

    They should have a similar option for unsubscribing for the sms as well.

  3. Citibank once mailed me saying they would give me Rs 2 lacs at 15% interest translating to Rs 6743 EMI for 48 months or in "numbers" Rs 323664 in 4 years.
    I was wondering why would I pay such a high interest for a loan that I don't need. If they plan me to be interested atleast they should lower the interest rate and offer me a 6% loan or something. I mailed back the manager simply ridiculing the offer.

  4. isnt there any option to sue these guys for spamming with SMS or calling so many times on any numbers.

    Some times i get calls on my office extension and after i say pleaseeee dont call me again. they say sir, which office is this, and i have nothing more to say but, did you just hit some numbers on the key pad that you didnt even know where you wre calling.

  5. Gale lagne wali baat nahin yeh tau" aa bel mujhe maar" vali baat hai. Interesting Statistics, Rashmi. How right you are. Banks seem to be desperate for business. Either they are calling up for insurance or offering loans or offering to pay off the bills. So far so good but with the next generation, who knows? For such things the word is not "bank" but "bunk"

  6. Well.. I have tried the DO NOT call list s etc. They never work.
    I am used to getting 'Sir our bank is offering you XYZ loan pre-approved, no check/proof required' kind of calls - where the girl on other end wont take a "I am not interested" as an answer at all and keep repeating "But sir, its special rates, why sir?" kind of blabber. You try disconnecting and they call back...

    So the simple response which works wonders in cutting such calls short is "Yes, I am looking for a loan. I need Rs 10 crore for making a movie immediately". This has worked wonders so far. The executive on other end simply hung up on her own. Wow !!!

    Eternal Bliss !!!

  7. This is similar to the Auto Inclusion scheme launched by few foreign banks sometime ago. The included an insurance plan in the credit card statement of few credit card holders and said that the premium will not be charged for the first month and will be charged from the second month. The statement said that all credit card holders have automatically been included in the scheme and if they wish to opt out, they had to call up CitiPhone and request for exclusion from the scheme. Unwary customers will wake up when they see the charge included the subsequent month's card statement.

  8. Hey Rashmi,

    I had written a similar post on Credit Cards ,what do the agreements mean and why should we be cautious, here -

    Credit Cards

    Please do read.


  9. Have we noticed, we come out with all our vengeance on the first opportunity we get to pour our hearts and find someone to share our stories.

    Rashmi was spammed with a mail from a bank..something she did not want. Sure, but there are a 100 things happening around us or with us that we do not agree to.... do you actually want me to pen down eqv examples....ever read the flat purchase agreement copy, seen the warranty on mobile, attempted to seek a claim from insurance co, got a refund from a so called low-cost airline.

    All these guys take us for granted.... and you and i do, when dealing with a client (atleast a retail client). As an employee / entrepreneur, we make use of the loop holes in the system to get our way..dont we?

    We need to do more than just shed some tears.

  10. I actually found India Credit Card Resources to be a pretty useful resource on credit card data in India. I used it recently for a universiy report.

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