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!
