Banks give credit card defaults an easy loan to pay dues

NEW DELHI: If you have a large amount outstanding on your credit cards and are paying the usual high interest on the same, here is an opportunity to convert it from a credit card loan to a low rate bank loan. long-term interest.

Many banks offer lucrative programs to cardholders to reduce their exposure to credit cards following a surge in bad assets linked to them. Almost all major banks, including

and Citibank, offer similar programs but do not want to make them public, which could increase the risk that more card users will default on their regular obligations and opt for these easier payment options.

“We offer different structured payment plans. These limited plans are developed in consultation with the customer as an alternative repayment plan, ”said a senior official at ICICI bank, who declined to be named. A letter sent to the bank, however, went unanswered until the time of filing this story. The plan varies from bank to bank.

So if you have an outstanding loan of around Rs 2 lakh and you pay interest of up to 18%, you can convert it to a regular loan, spread over a period of three years, where your rate is interest can be as low as 12%. “We have a retention-driven, support-based collection process, and if there is a genuine inability to pay, we work closely with clients to come up with reimbursement solutions based on their cash flow. cash, ”Citibank Card Business Director Sandeep Bhalla said.

Citibank has approximately 2.5 million cardholders. A spokesperson for CIBIL said that when a bank reports a restructured loan, it is recorded as such in CIBIL’s records and is similarly reflected in the credit report.

The banks refused to disclose their bad debts, but it is evident that they are now very cautious about the business.

The credit card base had fallen 21% to 21.1 million at the end of October 2009, from 26.7 million a year ago. Credit card outstanding also fell 12.13% to Rs 5,660 crore at the end of October 2009, from 6,442 crore a year ago.

According to a research report by Venture Infotek, all banks are cutting back on their credit card activity. ICICI Bank alone reduced the number of cardholders from 9 million in 2008 to 7 million in 2009.