The fact that India has a poor credit monitoring system is not a new one. But when this phenomenon has been coupled with factors like the huge rise in the number of credit cards that are issued on an annual rate, along with the rise in late payments for several large players has worsened the current scenario in the country. Many top officials of leading banks in the country have gone on record to state that their credit cards are performing remarkably well in all parts of the globe, with the exception of India. Now this is some reason to worry as it directly hampers the performance of the credit card industry, leading to a further impact on customer behavior in the market.
One of the major reasons for this lackluster behavior of the credit monitoring system in the country can be attributed to various delinquencies such as the absence of a robust regulatory authority in the country to monitor the credit worthiness and the performance of banks in the country. This in turn hampers the overall credit behavior of enterprises in the industry as they are in tandem with rapid growth requirements. When this is mixed with the late repayment phenomenon of the average Indian credit card customer, this situation has reached its darkest stage. Industry insiders believe that such a scenario will continue until a strong regularity credit authority is not set up in the country. Such a credit authority must be a central body with the jurisdiction to possess all such relevant organizations under its ambit.
If you review the recent behavior and performance of credit cards in the market, you will notice that there has been a constant interchange in banks clinching the top spot. This shows that banks have fallen prey to the transcending changes in the industry, facing issues with tough competition and inconsistency, along with default and irregular payments by customers. Due to such cut-throat competition, banks are beginning to offer credit cards to prospective customers with several additional deals and benefits in order to attract the highest number of people to their schemes. Credit cards are being offered free of charge, with no strings attached. While this may seem to be a tempting offer that is hard to miss, one can note that for quantity, banks have begun to compromise on the quality of their credit card programs. Many times people have ended up buying debt like loans like personal loan etc to repay the debt on their credit card, an amount for which they might have not been responsible for. The Reserve Bank of India recently warned banks in the country to refrain from distributing credit cards in such a careless spree, without any transparency in their actions or charges. There has also been an increase in the number of credit card delinquencies owning to a rise in the rate of inflation in the country along with a surge in the interest rates over credit cards. The anomaly is that since banks offer credit cards at such convenience to customers, it is very easy for customers to shift their preferences from one card to the other, in order to escape additional costs and benefits.
While banks today report all complaints related to delinquent customers to the Credit Information Bureau of India or CIBIL, many aren’t satisfied with the way this body has been functioning. Thus, in order to protect the credit monitoring system of the country, it is important to establish a centralized credit bureau that will take care of all delinquent credit issues in the country. The norm in developed countries is that such regulatory authorities maintain a profile of all such delinquent customers, ensuring that they cannot opt for a credit card from another card provider until they clear all prior dues. If such a centralized body sets foot in our country, we can have a better credit monitoring system and thereby, lesser complaints regarding delinquent customers.