STUDY ON THE USAGE OF CREDIT CARD IN INDIA

Dissertation Submitted to the

Padmashree Dr. D.Y. Patil University

in partial fulfillment of the requirements for the

award of the Degree of

MASTERS IN BUSINESS ADMINISTRATION

Submitted by:

ANKIT BHANGADIYA

(Roll No. 09132)

Research Guide

Ms. Smriti Alva

Lecturer

Department of Business Management

Padmashree Dr. D.Y. Patil University

CBD Belapur, Navi Mumbai

February 2011

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DECLARATION

I hereby declare that the dissertation “Study on the usage of credit card in India” submitted for the MBA Degree at Padmashree Dr. D.Y. Patil University’s Department of Business Management is my original work and the dissertation has not formed the basis for the award of any degree, associate ship, fellowship or any other similar titles.

Place: Mumbai

Date:

Signature of the Student

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CERTIFICATE

This is to certify that the dissertation entitled “Study on the usage of credit card in India” is the bona fide research work carried out by Mr. Ankit Bhangadiya student of MBA, at Padmashree Dr. D.Y. Patil University’s Department of Business Management during the year 2009-2011, in partial fulfillment of the requirements for the award of the Degree of Master in Business Management and that the dissertation has not formed the basis for the award previously of any degree, diploma, associateship, fellowship or any other similar title.

__________________

(Ms. Smriti Alva)

__________________

(Dr. R. Gopal,

Director,

Department of Business Management,

Padmashree Dr. D.Y. Patil University)

Place: Mumbai

Date:

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PREFACE

While searching for a suitable topic for the MBA Dissertation, I happened to meet a person from the Finance Sector, who suggested to me the topic on the Banking Sector of India. During the course of the discussion, it transpired that the problem that this sector faces is with respect to Credit card usage in India.

The topics having aroused my curiosity, discussions were held with several people in the retail sector to understand the veracity of the above thought process and also understand the real issues plaguing the industry.

All these aspects then resulted in the development of the project report titled ‘STUDY ON THE USAGE OF CREDIT CARD IN INDIA’

It is strongly hoped that this project covers not only the various requirements of the Project Study but also of the Industry.

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ACKNOWLEDGEMENT

In the first place, I thank the Padmashree Dr. D. Y. Patil University,

Department of Business Management, Navi Mumbai for giving me an

opportunity to work on this project.

I would also like to thank Ms. Smriti Alva, Lecturer, Department of Business

Management, Padmashree Dr. D.Y. Patil University, Navi Mumbai for

giving me her valuable guidance for the project. Without her help it would

have been impossible for me to complete the project.

I would also like to thank the various people from the Banking industry who

have provided me with a lot of information and in fact even sharing some of

the confidential company documents and data – many of which I have used

in this report and without which this project could not have been completed.

I would be failing in my duty if I do not acknowledge with a deep sense of

gratitude the sacrifices made by my parents and thus have helped me in

completing the project work successfully.

Place: Mumbai

Date:

Signature of the student

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1. EXECUTIVE SUMMARY

Credit cards provide benefits to consumers and merchants not provided by other payment instruments as evidenced by their explosive growth in the number and value of transactions over the last 20 years. Recently, credit card networks have come under scrutiny from regulators and antitrust authorities around the world. Focusing on interrelated bilateral transactions, several theoretical models have been constructed to study the implications of several business practices of credit card networks. Suggestions for future research are also discussed.

The phenomenal growth witnessed globally in the 20th century in the manufacturing industries sector helped fulfill man’s physiological needs like food, shelter and clothing in a big way. Increasing demand for satisfaction of these needs engineered the proliferation of companies involved in their manufacture of variations to the same product. Simultaneously, economic, social, cultural and technological development of society led to the growth of the service industry.

Further, society also exhibited increasing affluence combined with growing complexity of life. The world- wide boom witnessed in the consumer, Credit card only marked the beginning of the new era of banking and financed system. It has also become a practice among the trading firm to extend liberal credit to customers.

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2. OBJECTIVES OF THE STUDY

The primary objective of the report is categorized into following sub-topics:

1. To study the demographic factors of credit card holders.

2. To study the utility of credit card by the holders.

3. To assess the behavioral changes of credit card holders.

4. To study the satisfaction level of existing credit card holders.

5. To suggest measures to improve the credit card system in India.

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3. RESEARCH METHODOLOGY

The study is based on primary data, which has been collected

from the credit card users with the help of a well drafted and

structured questionnaire. For the collection of primary data, we

have confined ourselves to Panvel, India. Our sample consists

of a total of 150 respondents. The respondents are basically

credit card users, who have been selected by following the non-

probabilistic sampling, simple purposive sampling and

convenience sampling techniques.

Further, it is essential to mention two things: Firstly, in

convenience-sampling, respondents (who were seen using/have

possession of credit cards) were selected because they

happened to be in the right place at the right time and Secondly,

convenience sampling technique is not recommended for

descriptive or casual research, but they can be used in

exploratory research for the generation of ideas. In addition, the

respondents had to rate the credit cards according to the

importance, on the `five-point Likert scale.’

Research Problem

The main purpose of the project is to understand the usage of

credit card by the holders according to demographic factors, their

utility purpose and their satisfaction level.

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Sampling Plan

Target Population: Credit Card holders

Sample Size: 150 respondents of Panvel City

Sampling technique: Convenience sampling

Data sources

Primary sources

Primary data has been collected through the structured

questionnaire consisting mainly of the closed ended questions.

Secondary sources

Secondary data has been collected from the internet, journals, reference books etc.

Research Design

The research design that has been used is Descriptive

Research.

Involves gathering data that describe events and then

organizes, tabulates, depicts, and describes the data.

Uses description as a tool to organize data into patterns

that emerge during analysis.

Often uses visual aids such as graphs and charts to aid the

reader.

The methods used for this research would be mainly by the response to the questionnaire by the credit card holders.

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4. LITERATURE REVIEW

INDIAN SCENARIO:

The first credit card to enter India was the diner’s club card in the year 1964. The first Indian banks to launch credit cards were Andhra bank was VISA classic in the year 1981, followed by central bank of India’s credit card in collaboration with Master Card Corporation in the same year. The other nationalized banks, canara banks, bank of India, and bank of Baroda, etc. gradually introduced their credit cards in India only later. Apart from these Indian banks, many foreign banks such as citi bank, standard chartered bank, ANZ Grindlays bank, bank of America and American express bank have also introduced their proprietary and other franchised cards through their Indian branches.

Citibank issues diners’ club card, Andhra bank now offers four types of credit cards for different categories of people, including the VISA ICC card for international usage. Similarly, Canara bank has a range of cards, from their proprietary cancard to franchised cards such as cancard visa, cancard master, and VISA international gold cards, etc., bank of Baroda has started its BOBCARD master, and developed to BOBCARD (global). Today, this bank issues 4 types of credit cards. The bank issues regular card, international card, ATM card and very recently, the ATM-cum-debit card.

There are about 12 major banks, both foreign and Indian, which currently provide cards in India. Many other banks, such as Indian Overseas Bank, Dena Bank, Corporation Bank, and Vysya Bank have affiliations with the principal issuers like Canara Bank, Citibank, Bank of India, etc., for issuing credit cards using the brand name of the original issuers.

The card industry in India is poised for big growth, thanks to the technology revolution that is taking place. The Reserve Bank of India is taking special measures to promote the use of alternate payment systems like credit cards, debit cards, etc. to ease the pressure on currency printing and the use of cheques. On the legal front too, the developments in India are becoming favorable to the card industry. Banks can now file summary suits against defaulters for quicker recovery of credit card dues. This has made

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an increasing number of Indian banks realize the credit card potential and spurred them to enter the ever-expanding card business.

Prepaid/stored value cards are also gaining popularity in the Indian market. For instance, oil companies issue “petrocards” for easier payment at the company’s petrol stations. Similarly, the Mahanagar Telephone Nigam Limited (MTNL) has already introduced its “virtual calling card “and has recently launched a co-branded telecom credit card to facilitate payment of telephone bills.

Credit card lending has surged to such an extent that average loan amounts ($32,400 in 2004) made to small businesses with revenues greater than $1 million were actually smaller than average loan amounts ($42,600) made to the smallest businesses with revenues under $1 million12. The larger small businesses are receiving a greater portion of credit card loans than the smallest small businesses.

Some Indian banks have made an entry into the smart card business too. However, a further thrust in these areas will come only with operational experience and also by having greater clarity on payment modes and their implications for policy conduct. The Reserve bank of India (RBI) has formed a working group in the Department on the smart rupees system (smars) project, undertaken by IIT-Mumbai.

Some of the banks are planning to launch WAP based mobile banking services. The service will provide information such as online balance updates and details of the last five transactions, besides accepting requests for cheque books and statements. Such a service aims at providing specialized services such as fund transfer, bill payment , shopping facilities, investment advisory, etc.

Sujit Chakravorti

Federal Reserve Bank of Chicago - Research Department

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Beneficiaries of the Study

1. BanksBanks may come to know about the usage pattern of the credit

card holders based on the demographics, purposes and

consumption pattern and may aim to target new customers

based on the derived facts.

2. Probable subscribersNew prospects may find it helpful in selecting the credit card

company and the bank issuing the credit based on the

satisfaction level of the existing credit card holders.

3. ResearchersStudy gives the researchers the insight about the credit card

system prevailing and the usage pattern and satisfaction level of

the existing credit card holders.

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Scope of the study

All the questions have been analyzed by adding up the

responses against each alternative and answers from the

various respondents. The collected data has been subject to

statistical analysis to draw inferences and suitable conclusions.

Statistical tools like chi-square and percentage are used. For

calculating the table value for analysis with chi-square, 5%

significance level is used.

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5. LIMITATION OF THE STUDY

1. The study is confined to the city of Panvel only.

2. The respondents were generally co-operative, yet some of them

might have biased their reply for certain sensitive questions.

3. The duration of the study is also in accordance with the

academic objective of the course curriculum. So in pursuit of

academic exercise, the restriction on time has also brought into

study some limitations.

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CHAPTERIZATION

Chapter No Title

Page No

A   List of Tables  

B   List of Figures  

C   List of Abbreviations  

1   Executive Summary  

2    Objective of the Study  

3   Research Methodology  

4   Review of Literature  

5 Limitation of the Study

6   Banking Industry in India - A perspective  

6.1 Introduction

6.2 Government Initiatives

6.3 Banks initiative

6.4 Current Banking Scenario

6.5 Growth of Banking Sector

6.6 Growth of Banks

7   Introduction to Credit card  

  7.1 Definition and Concept of Credit card  

  7.2 Features of Credit Card  

  7.3 Facilities and Services  

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  7.4 Classification of Credit Card  

7.5Credit Card Transaction Process and Parties Involved in it.

7.6 Advantages and Disadvantages of Credit Card

8  Introduction to Credit Card Industry  

  8.1 History  

  8.2 Credit card Industry in India  

8.3 Statistics and Projections of Credit card Industry

8.4 Credit Card Operations of Bank- Guidelines

8.5 Credit card market in India

8.6 Credit Card Frauds

9   Credit Card Industry Analysis- Porters 5 Forces  

10   Analysis and Interpretation of Data  

11   Finding and Suggestions  

12   Conclusion  

13   Reference Section  

  12.1 Questionnaire  

  12.2 Bibliography  

  12.3 SPSS Output  

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6. BANKING INDUSTRY IN INDIA – A PERSPECTIVE

6.1 Introduction

Banking in India originated in the last decades of the 18th century.

The oldest bank in existence in India is the State Bank of India, a

government-owned bank that traces its origins back to June 1806

and that is the largest commercial bank in the country. Central

banking is the responsibility of the Reserve Bank of India, which in

1935 formally took over these responsibilities from the then

Imperial Bank of India, relegating it to commercial banking

functions. After India's independence in 1947, the Reserve Bank

was nationalized and given broader powers. In 1969 the

government nationalized the 14 largest commercial banks; the

government nationalized the six next largest in 1980.

The Indian Banking industry, which is governed by the Banking

Regulation Act of India, 1949 can be broadly classified into two

major categories, non-scheduled banks and scheduled banks.

Scheduled banks comprise commercial banks and the co-

operative banks. In terms of ownership, commercial banks can be

further grouped into nationalized banks, the State Bank of India

and its group banks, regional rural banks and private sector banks

(the old/ new domestic and foreign). These banks have over

67,000 branches spread across the country.

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The first phase of financial reforms resulted in the nationalization

of 14 major banks in 1969 and resulted in a shift from Class

banking to Mass banking. This in turn resulted in a significant

growth in the geographical coverage of banks. Every bank had to

earmark a minimum percentage of their loan portfolio to sectors

identified as “priority sectors”. The manufacturing sector also grew

during the 1970s in protected environs and the banking sector was

a critical source. The next wave of reforms saw the nationalization

of 6 more commercial banks in 1980. Since then the number of

scheduled commercial banks increased four-fold and the number

of bank branches increased eight-fold.

After the second phase of financial sector reforms and

liberalization of the sector in the early nineties, the Public Sector

Banks (PSB) s found it extremely difficult to compete with the new

private sector banks and the foreign banks. The new private sector

banks first made their appearance after the guidelines permitting

them were issued in January 1993. Eight new private sector banks

are presently in operation. These banks due to their late start have

access to state-of-the-art technology, which in turn helps them to

save on manpower costs and provide better services.

During the year 2000, the State Bank of India (SBI) and its 7

associates accounted for a 25 percent share in deposits and 28.1

percent share in credit. The 20 nationalized banks accounted for

53.2 percent of the deposits and 47.5 percent of credit during the

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same period. The share of foreign banks (numbering 42), regional

rural banks and other scheduled commercial banks accounted for

5.7 percent, 3.9 percent and 12.2 percent respectively in deposits

and 8.41 percent, 3.14 percent and 12.85 percent respectively in

credit during the year 2000.

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6.2 Government initiatives

The Cabinet, on December 1, 2010 approved to provide an additional

amount of US$ 1.33 billion, in addition to the US$ 3.32 billion already

provided in the Budget 2010-11, to ensure Tier I CRAR (Capital to Risk

Weighted Assets) of all Public Sector Banks (PSBs) at 7 per cent and

also to raise Government of India holding in all PSBs to 58 per cent. It

also approved that the exact amount, mode of capitalization and other

terms and conditions would be decided in consultation with the banks at

the time of infusion.

The proposed capital infusion would enhance the lending capacity of

the PSBs to meet the credit requirement of the economy in order to

maintain and accelerate the economic growth momentum.

The RBI has allowed banks to make changes in the repayment

schedules or drawdown without prior approval from the central bank.

However, such a change could be made on the condition that the

average maturity of the loan should remain the same. The move is

expected to make external commercial borrowing (ECB) transactions

easier. Transactions both through automatic and approval routes can

take advantage of this change. Now, without the prior approval of RBI,

Indian companies may borrow up to US$ 500 million in a year.

As part of further liberalization of the extant branch licensing policy in

respect of regional rural banks (RRBs), they have been permitted to

open branches in Tier 3 to Tier 6 centres (with population up to 49,999

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as per Census 2001) without the Reserve Bank's prior authorization

provided-

The capital to risk-weighted assets ratio (CRAR) is at least 9 per cent; The net non-performing assets (NPAs) are less than 5 per cent;

They have not defaulted in the maintenance of cash reserve ratio (CRR)/statutory liquidity ratio (SLR) during the last year; and

They have earned a net profit in the last financial year.

On the lending side, the Base Rate system replaced the Benchmark Prime Lending Rate (BPLR) system with effect from July 1, 2010. Base Rates of scheduled commercial banks (SCBs) were fixed in the range of 5.50-9.00 per cent. Subsequently, several banks reviewed and increased their Base Rates in the range of 10–50 basis points by October 2010. Base Rates of major banks, accounting for over 94 per cent in total bank credit, are in the range of 7.50-8.50 per cent. Banks have also raised their BPLRs in the range of 25-75 basis points for their old loans.

As at end-July 2010, around 70,000 branches of 98 banks had participated in the national electronic funds transfer (NEFT) system and the volume of transactions processed increased to 9.5 million in July 2010.

The repo rate and the reverse repo rate under the liquidity adjustment facility (LAF) have been increased since November 2, 2010 as under:

The repo rate has been raised by 25 basis points from 6.0 per cent to 6.25 per cent with immediate effect.

The reverse repo rate has been raised by 25 basis points from 5.0 per cent to 5.25 per cent with immediate effect.

The cash reserve ratio (CRR) of scheduled banks has been retained at 6.0 per cent of their net demand and time liabilities (NDTL).

Meanwhile, outstanding bank credit in the 15 days up to October 8, 2010 rose by US$ 10.56 billion to US$ 784.58 billion, according to scheduled banks' statement of position released by the RBI.

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On a year-on-year basis, credit has grown at more than 20 per cent till date, the RBI data showed.

6.3 Bank initiatives

Since December 2008, the government has announced series of

measures to augment flow of credits to around US$ 2, 66,274 to

SMEs. To improve the flow of credit to industrial clusters and

facilitate their overall development, 15 banks operating in Orissa

including the public sector State Bank of India (SBI) and the Small

Industries Development Bank of India (SIDBI) have adopted 48

clusters specially in sectors like engineering tools, foundry,

handloom, food processing, weaving, rice mill, cashew processing,

pharmaceuticals, bell metals and carpentry etc.

PSBs are now cashing in the auto loan segment after the exit of

private players owing to the slowdown. Auto loans usually have

three components - car loans, two-wheeler loans and commercial

vehicle loans. PSBs are primarily focusing on car and two-wheeler

loans. Prevalent interest rates in the car loan segment now range

between 11 per cent and 12.5 per cent per annum. For instance,

according to the Union Bank of India Chairman and Managing

Director, MV Nair, his bank had recently tied up with Maruti Suzuki

India for financing the latter's product and it has a US$ 163.84

million auto loan portfolio.

The government has told public sector banks (PSBs) to extend

credit to fund-starved Indian industry, especially exporters and

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small and medium sector enterprises to address their credit needs.

SIDBI would be lending US$ 1.33 billion out of US$ 1.47 billion

credit from RBI to public sector banks. This is being provided to

the PSBs at 6.5 per cent (SIDBI is getting the credit at 5.5 per

cent) under the condition that the banks will have to lend this

credit to the medium and small-scale industry units at an interest

rate of 10 per cent before March 31, 2010.

According to SBI Chairman, O P Bhatt, contribution of small and

medium enterprises (SMEs) is nearly 40-50 per cent to GDP

growth of the nation, and this sector also accounts for 50 per cent

of the industrial output. "Banks could accrue revenue of over US$

5.73 billion by encouraging the SMEs," Bhatt said adding, "SME's

sector is to grow fastest in the next five years, with 14 per cent

growth in terms of revenue and 13 per cent in terms of profits."

The bank in order to help units tide over the current downturn, had

introduced products like “SME Care” specially in Jharkhand, which

provides units to access 20 per cent additional funds over and

above their existing overdraft limit. Already, according to an

official, the MSME ministry has proposed to RBI that the sector be

given a mandatory 15 per cent share of the total priority sector

lending. The banking industry is thereby now lending both strength

and support in form of cash and policies majorly in putting back

the economy into track.

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6.4 Current Banking scenario

The industry is currently in a transition phase. On the one hand, the PSBs,

which are the mainstay of the Indian Banking system, are in the process of

shedding their flab in terms of excessive manpower, excessive non

Performing Assets (NPAs) and excessive governmental equity, while on

the other hand the private sector banks are consolidating themselves

through mergers and acquisitions.

PSBs, which currently account for more than 78 % of total banking industry

assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000),

falling revenues from traditional sources, lack of modern technology and a

massive workforce while the new private sector banks are forging ahead

and rewriting the traditional banking business model by way of their sheer

innovation and service. The PSBs are of course currently working out

challenging strategies even as 20 percent of their massive employee

strength has dwindled in the wake of the successful Voluntary Retirement

Schemes (VRS) schemes.

The private players however cannot match the PSB’s great reach, great

size and access to low cost deposits. Therefore one of the means for them

to combat the PSBs has been through the merger and acquisition (M& A)

route. Over the last two years, the industry has witnessed several such

instances. For instance, Hdfc Bank’s merger with Times Bank, Icici Bank’s

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acquisition of ITC Classic, Anagram Finance and Bank of Madura.

Centurion Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to be

on the lookout. The UTI bank- Global Trust Bank merger however opened

a Pandora’s box and brought about the realization that all was not well in

the functioning of many of the private sector banks.

Private sector Banks have pioneered internet banking, phone banking,

anywhere banking, and mobile banking, debit cards, Automatic Teller

Machines (ATMs) and combined various other services and integrated

them into the mainstream banking arena, while the PSBs are still grappling

with disgruntled employees in the aftermath of successful VRS schemes.

The Indian banking industry is currently termed as strong, having

weathered the global economic slowdown and showing good numbers with

strong support flowing in from the Reserve Bank of India (RBI) measures.

Furthermore, a report "Opportunities in Indian Banking Sector", by market

research company, RNCOS, forecasts that the Indian banking sector will

grow at a healthy compound annual growth rate (CAGR) of around 23.3 per

cent till 2011. Banking, financial services and insurance (BFSI), together

account for 38 per cent of India's outsourcing industry (worth US$ 47.8

billion in 2007). According to a report by McKinsey and NASSCOM, India

has the potential to process 30 per cent of the banking transactions in the

US by the year 2010. Outsourcing by the BFSI to India is expected to grow

at an annual rate of 30–35 per cent.

According to a study by Dun & Bradstreet (an international research body)

—"India's Top Banks 2008"—there has been a significant growth in the

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banking infrastructure. Taking into account all banks in India, there are

overall 56,640 branches or offices, 893,356 employees and 27,088 ATMs.

Public sector banks made up a large chunk of the infrastructure, with 87.7

per cent of all offices, 82 per cent of staff and 60.3 per cent of all ATMs.

According to the RBI, Indian financial markets have generally remained

orderly during 2008-09. In view of the tight liquidity conditions in the

domestic money markets in September 2008, the Reserve Bank

announced a series of measures beginning September 16, 2008. Thus, the

average call rate which was at 10.52 per cent declined to 7.57 per cent in

November 2008 under the impact of these measures.

Measures aimed at expanding the rupee liquidity, included significant

reduction in the cash reserve ratio (CRR), reduction of the statutory liquidity

ratio (SLR), opening a special repo window under the liquidity adjustment

facility (LAF) for banks for on-lending to the non-banking financial

companies (NBFCs), housing finance companies (HFCs) and mutual funds

(MFs), and extending a special refinance facility, which banks could access

without any collateral.

The reserve money lying with the RBI as on November 21, 2008 as per the

January 2009 bulletin, is a total amount of US$ 179.28 billion and RBI’s

credit to the commercial sector stood at US$ 3.65 billion. Further, banks in

India put up strong growth and profit numbers in the October-end-

December 2008 period owing to high credit growth and easing of yield on

government bonds. Top Indian banks have increased their earnings by

almost 40 per cent year-on-year for the same period. According to latest

Reserve Bank of India (RBI) data, bank credit grew by 24.6 per cent year-

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on-year as of December 19, 2008. The resulting credit growth was even

better at 41 per cent during the April-end-December 2008 period. Deposits

grew by 20.6 per cent as of December 19, 2008.

The growth in advances reflects that the net interest income (NIM) too

would indicate higher growth rate. RBI has taken a number of steps to

lower the cost of credit in this quarter like cutting cash reserve ratio (CRR),

the amount of funds banks have to keep on deposit with it, repo and

reverse repo rate. The CRR rate, which had been reduced in December

2008, to 5.50 per cent, repo rate to 6.50 and reverse repo rate to 5.00,

were further reduced – CRR to 5 per cent, (its lending rate) repo rate to 5.5

per cent and reverse repo, at which it absorbs cash from the banking

system, to 4 per cent in January 2009.

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6.5 Growth of Banking Sector

An analysis of Indian Banking sector include the Growth in advances and

deposits, Market share, NPAs, CAR, Exposure norms, Retail Banking

Initiatives and Major Players.

The Reserve Bank of India (RBI), as the central bank of the country,

closely monitors developments in the whole financial sector.

The banking sector is dominated by Scheduled Commercial Banks

(SCBs). As at end-March 2002, there were 296 Commercial banks

operating in India. This included 27 Public Sector Banks (PSBs), 31

Private, 42 Foreign and 196 Regional Rural Banks. Also, there were

67 scheduled co-operative banks consisting of 51 scheduled urban

co-operative banks and 16 scheduled state co-operative banks.

Scheduled commercial banks touched, on the deposit front, a growth

of 14% as against 18% registered in the previous year. And on

advances, the growth was 14.5%against 17.3 % of the earlier year.

State Bank of India is still the largest bank in India with the market

share of 20%. Icici and its two subsidiaries merged with Icici Bank,

leading creating the second largest bank in India with a balance sheet

size of Rs1040bn.

Retail Banking is the new mantra in the banking sector. The home

loans alone account for nearly two-third of the total retail portfolio of

the bank. According to one estimate, the retail segment is expected

to grow at 30-40% in the coming years.

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Net banking, phone banking, mobile banking, ATMs and bill

payments are the new buzz words that banks are using to lure

customers.

With a view to provide an institutional mechanism for sharing of

information on borrowers/ potential borrowers by banks and Financial

Institutions, the Credit Information Bureau (India) Ltd. (Cibil) was set

up in August 2000. The Bureau provides a framework for collecting,

processing and sharing credit information on borrowers of credit

institutions. SBI and Hdfc are the promoters of the Cibil.

The RBI is now planning to transfer of its stakes in the SBI, NHB and

National Bank for Agricultural and Rural Development to the private

players. Also, the Government has sought to lower its holding in

PSBs to a minimum of 33 per cent of total capital by allowing them to

raise capital from the market.

Banks are free to acquire shares, convertible debentures of corporate

and units of equity-oriented mutual funds, subject to a ceiling of 5% of

the total outstanding advances (including Commercial Paper) as on

March 31 of the previous year.

The finance ministry spelt out structure of the government-sponsored

ARC called the Asset Reconstruction Company (India) Limited (Arcil),

this pilot project of the ministry would pave way for smoother

functioning of the credit market in the country. The Government will

hold 49% stake and private players will hold the rest 51% - the

majority being held by ICICI Bank (24.5%).

6.6 Growth of Banks

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HDFC Bank and Axis Bank continue to remain as leaders of the private

sector banks. Both the banks have maintained the advances growth and

NIM. SBI, Punjab National Bank, Bank of India and Union Bank are

expected to lead among PSU Banks.

The State Bank of India is planning to open 1,000 new branches across the

country to cover 100,000 villages in the coming FY 2009-10, according to

the bank Chairman, Mr. O P Bhatt. The bank had decided to rope in 300

new customers every year for each branch using initiatives. According to

Mr. Bhatt, the bank could get a record US$ 5.54 billion during December

2008, the highest amount collected by any bank in the country.

Further, public sector banks (PSBs) on January 12, 2009 also decided to

lower interest rates on bulk deposits and to offer a maximum rate of 7.5 per

cent for one-year maturity. Earlier, on January 1, banks had lowered the

interest rates on bulk deposits from 9.5 per cent to 8.5 per cent. According

to the latest RBI data, growth in broad money (M3), year-on-year (y-o-y),

was 19.6 per cent (US$ 151.04 billion) on January 2, 2009 lower than 22.6

per cent (US$ 141.82 billion) a year ago. Aggregate deposits of banks,

year-on-year, expanded 20.2 per cent (US$ 133.08 billion) on January 2,

2009 as compared with 24.0 per cent (US$ 127.49 billion) a year ago.

The growth in bank credit continued to remain high. Non-food credit by

scheduled commercial banks (SCBs) was 23.9 per cent (US$ 102.78

billion), year-on-year, as on January 2, 2009 from 22.0 per cent (US$ 77.79

billion) a year ago. Scheduled commercial banks’ credit to the commercial

sector expanded by 27.0 per cent (year-on-year) as on November 21,

2008, as compared with 23.1 per cent a year ago. Non-food credit of

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scheduled commercial banks expanded by 26.9 per cent, year-on-year, as

on November 21, 2008, higher than 23.7 per cent a year ago.

According to earlier RBI data, for the third quarter (September 26-

December 27, 2008), total bank credit was up US$ 21.91 billion compared

with a growth of US$ 22.91 billion in the same period a year ago. In the

preceding quarter, credit had risen by US$ 26.50 billion.

RBI data for deposits shows that for the Oct-end December 31, 2008

period, although deposit growth has slowed to US$ 25.99 billion against

US$ 33.18 billion in the April-end to September, 2008 period, it was still

stronger in the December 31 quarter period, 2008, as compared to the

year-ago quarter when absolute growth was US$ 16.37 billion.

Net banking capital amounted to US$ 4.8 billion in April-September 2008

as compared with US$ 5.7 billion in April-September 2007. Accounting for a

part of banking capital, non-resident Indian (NRI) deposits showed a net

inflow of US $ 1.1 billion in April-September 2008, increasing from net

outflow of US$ 78 million in April-September 2007.

Lending by banks also rose more than 76 per cent to Rs 2,80,000 crore

(US$ 57.26 billion) during April-November 2008-09 from the same

period a year ago, according to data available with the Reserve Bank of

India (RBI). The Reserve Bank of India on January 21, 2009 fixed the

Reference rate for the US currency at Rs 48.93 per dollar and the single

European unit at Rs 63.70 per euro from Rs 49.12 per dollar and Rs

63.61 per euro, respectively.

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7. INTRODUCTION TO CREDIT CARD

7.1 Definition and Concept of credit card

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Definition

A credit card is a credit-token within the meaning of section 14(1),

Consumer Credit Act 1974 of the UK which defines a credit-token as a

card, cheque, voucher, coupon, stamp, form booklet or other document

or thing given to an individual by a person carrying on a consumer credit

business, who undertakes:- that on the production of it (whether or not

some other action is also required), he will supply, cash, goods and

services (or any of them) on credit, or that were, on the production of it

to third party (whether or not any other action is also required), the third

party supplies cash, goods and services (whether or not deducting any

discount or commission), in return for payment to him by the individual.

In very simple words credit card can be termed as an unsecured

personal loan offered to customers by the banks where the card-holder

could purchase goods and services from authorized merchant or

merchant establishments (MEs) of the bank up to a fixed limit on credit.

Such credit is normally made available for a period of 30 to 45 days.

This is turn helps earn income by way of commission from its merchant

establishments; the scheme provided large scope for sale and

increased turnover with assured and prompt payment.

A credit card allows consumers to purchase products or services

without cash and to pay for them at a later date. To qualify for this type

of credit, the consumer must open an account with a bank or company,

which sponsors a card. They then receive a line of credit with a

specified dollar amount. They can use the card to make purchases from

participating merchants until they reach this credit limit. Every month the

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sponsor provides a bill, which tallies the card activity during the previous

30 days. Depending on the terms of the card, the customer may pay

interest charges on the amount that they do not pay for on a monthly

basis. Also, credit cards may be sponsored by large retailers (such as

major clothing or department stores) or by banks or corporations (like

VISA or American Express).

Concept

Progress in civilization in its turn has brought out radical changes in the

manner of trading. The need for something intrinsically useful and easily

applicable in everyday dealing is clearly felt. Cash in the form of

currency notes and coins makes up just one form of the payment

system. Development in banking while also giving inputs to the further

development of cash brought about a second phase in payment namely

paper instructions such as cheques and credit transfers. The

requirement for greater flexibility and convenience has led to electronic

payments, and this is where plastic cards have proved their worth. It

allows the card issuers to limit the sum of money the card-holders wish

to spend. The credit of card-holders who have defaulted on payments or

who are over their credit limit can be restricted until the balances are

cleared.

7.2 FEATURES OF CREDIT CARD

Any card that is used as a payment device to access a customer's financial resources is referred to as a credit card. The card may be used

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during travel, home, for purchases or at the Automated Teller Machines (ATMs) for credit or debit transactions. It is also known as "plastic money” and it can be used for the purchase of all kinds of goods and services.

Following are the salient features of the modern credit card:

Fees and Charges

The saying "there's no such thing as a free lunch" is particularly true when it comes to credit cards. So, find exactly what fees you're likely to be paying, and if it's possible to avoid them. For example, you may avoid paying interest if you pay the balance off in full each month.

Annual Fee

When the credit card companies realized that some people really could be disciplined and pay off their balance each month, they discovered they didn't make any money. So then came the annual fee - basically to make sure you pay them something for the use of their card. The good news is that with the credit card market being so competitive, you can often negotiate to have this fee removed.

Cash Advance Fee

Nearly every credit card company will charge you a cash advance fee. Be warned - some of them charge some very hefty cash advance fees.

Wide Usage:

Bank credit is the most widely used payment device issued by banks. It is based on the system of revolving credit whereby a credit limit is sanctioned to the customer and can be availed in part or in full. Once the outstanding balance is paid, the credit limit is restored for further use. The credit card holders can use the credit cards at merchant

locations to buy goods or services. Special credit cards can also be used to obtain cash through ATM's. Going by their popularity all over the world, credit cards have been a runaway success.

Owner Identification:

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A credit card identifies its owner as the one who is entitled to purchase goods and services without physical money and is eligible for credit from establishments.

Credit Limit:

The issuer, for the purpose of convenience and scrutiny, sets up a credit limit for its cardholders and a floor limit for its merchant’s establishments. The convenience and safety factors add value to these cards.

Technology Dependent:

The credit card business is typically a high volume low value business, with the potential to break-even only beyond a certain volume of cards issued, the dependence on technology is inevitable to keep the operating cost to the minimum

Other Fees

Credit companies are very good at coming up with fees for almost everything, so check the fine print and make sure you know what they are. Some things to look out for include over-the-limit fees, late-payment fees, return-item fees and set-up fees. Mostly these can be avoided by careful management, but it's still handy to be prepared if you ever get charged one.

7.3 FACILITIES AND SERVICES:

Besides providing credit, the credit card organizations extend some additional facilities to attract customers. Some of these facilities offered by banks are explained below:

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Risk Coverage

Depending on the type of card issued, some banks insure the cardholder free of cost for a particular sum. For example, Citibank offers a complimentary personal accident insurance upto Rs.10lakhs in case of an air accident and upto Rs.2 lakhs in case of any other accident. Similarly, the BOB card issued by the bank of Baroda extends insurance protection to the cardholder’s spouse also. It not only insures the cardholder against personal accident to the tune of Rs.10lakhs in case of air travel, or Rs.5lakhs in case of any other accident, but also gives the benefit of personal accident cover even to a non-card holding spouse to the tune of Rs.2lakhs.

Twenty four hour service

The revolutionary phone banking service ensures that the banks extend 24 hour customer service to assist the cardholder, all seven days a week. For example, SBI card help line available for SBI cardholders is of great help to cardholders and provides a variety of information required by customers.

Supplementary cards

Supplementary cards are issued to the family members of cardholders. A cardholder of any bank can obtain a maximum of two supplementary cards at the prevailing card fee for the immediate family members.

Photo card Option

Credit cards are now being issued with the photograph and signature of the cardholder digitally imprinted on the front of the card. These cards offer easier recognition and extra security.

Travel privileges

Banks provide travel assistance to their cardholders by offering a wide range of services linked to airline and hotel bookings, discounted holiday packages, car rentals and more. For example, Bank of Baroda has entered into a tie-up with I.T.C for travel privileges to its customers.

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Service over phone

Credit cardholders of selected banks can use their cards to pay for personal expenses where credit cards are not yet accepted. This is possible by instructing the bank over the phone to make payments for mutual funds, public issues, HP down payments, and paying telephone and electricity bills, besides issue of drafts.

Purchase protection

This facility protects the purchaser against damage or loss caused due to fire and theft at no extra cost. The cardholder can claim the value of the product damaged or lost from the New India Assurance Company. This protection is available for a period of ninety days from the date of purchase of the product using the card.

Emergency cash withdrawal

Citibank cardholders can withdraw emergency cash of upto 60 percent of the credit limit from ATMs in all leading metropolitan cities. The Indian Bank, however does not restrict cash withdrawing power only to a few automated and/or metropolitan locations, but allows cash withdrawals from all notified branches of the Indian Bank across the country.

Medical advance facility

Cardholders can draw upto Rs.15000 in case of medical emergencies for meeting expenses on treatment at locations other than their home town. This facility is available with all Indian and Foreign banks, depending on the type of card issued by the bank. For instance, standard chartered bank offers 10 to 20 percent discount on services at hospitals in leading cities across the country. This facility covers special rates on medical facilities, diagnostic tests, checks-ups, lab tests, nursing charges, and professional fees.

7.4 CLASSIFICATION OF CREDIT CARD

1. Based on mode of credit recovery:

Revolving credit card:

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This type of credit cards follows the revolving credit principle. A limit is set on the amount of money one can spend on the card for a particular period. The cardholder has to pay a minimum percentage of the outstanding credit which may vary from 5 to 10 percent at the end of a particular period. Interest varying from 30 to 36 percent per annum is charged on the outstanding amount.

Charge card: a charge card is not a credit instrument .It is a convenient mode of making payment. This facility gives a consolidated bill for a specific period and bills are payable in full on presentation. There is no interest liability and no pre-set credit limits either.

2. Based on status of credit card:

Standard card: Credit cards that are regularly issued by all cards – issuing banks are called “Standard cards”. With these cards, it is possible for a cardholder to make purchases with put having to pay cash immediately. It’s however; offers only limited privileges to cardholders. Some banks issue standard cards under the brand name “Classic “cards. These cards are generally issued to salaried people.

Business card: Business cards, also known as “executive” cards, are issued to small partnership firms, solicitors, firms of chartered accountants, tax-consultants and others, for use by executives on their business trips. The card enjoys higher credit limits and more privileges than the standard cards. These cards are issued in the names of the executives of the firms.

Gold card: The gold card offers high value credit for the elite. It offers many additional benefits and facilities such as higher credit limits, more cash advance limits etc that are not available with standard or executive Cards.

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.

3. Based on geographical validity:

Domestic card: Cards that are valid only in India and Nepal are called ‘domestic cards’. All transactions will be in rupees. These cards are issued by most of the banks in India.

International card: Credit cards that have international validity are called “international cards”. They are issued to people who travel abroad frequently. These cards are honored in every part of the world except India and Nepal. The cardholder can make purchases in foreign currencies subject to RBI sanction and FEMA rules and regulations.

4. Based on franchise/tie-up:

Proprietary card: Cards that are issued by the banks themselves, without any tie-up, are called ‘proprietary cards.’ A bank issues such cards under its own brand. Examples include SBI card, cancard of Canara bank, etc.

Master card: This is a type of credit card issued under the umbrella of ‘MasterCard international’. The issuing bank has to obtain a franchise from the MasterCard Corporation of USA. The franchised cards will be honored in the MasterCard network.

Visa card: This is a type of credit card, which can be issued by any bank having tie-up with VISA international corporation, USA. The banks that issue Visa cards are said to have a franchise is that one can avail.the facility of the VISA network for transactions.

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Domestic tie-up card:

These are cards issued by a bank having a tie-up with domestic credit card brands such as cancard and indcard, etc. For example, Indian Overseas Bank has tie-up with cancard. These banks issue cards to users through the original banks. However, they can have their bank name engraved on the card. Credit is available on similar lines to the original card.

5. Based on the issuer category:

Individual cards:

These are the non-corporate credit cards that are issued to individuals. Generally all brands of credit cards issue individual cards.

Corporate cards:

These are credit cards issued to corporate and business firms. The executives and top officials of the firms use these cards. The card bears the name of the firm, and the bills are paid by the firm.

7.5 Credit Card Transaction process and Parties Involved

Transaction Process

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When paying for purchases with a card, the transaction appears to happen almost instantaneously after the PIN is entered. However, there is a complex payments infrastructure behind the scenes making sure that the transaction is processed correctly. The following diagram sets out the steps, numbered from 1 to 8, in a card transaction’s payments cycle for a typical face–to–face or card present transaction; there are five stakeholders in the process.

Cardholder

This is a person with a debit, credit or charge card issued to them by a financial institution.

The cardholder may be asked to place their card into the chip and PIN reader (PIN pad or terminal) themselves, or hand the card to the merchant who will do this for them. Alternatively, if the card does not have a chip (only a magnetic stripe) or the merchant does not have a chip and PIN terminal, the merchant will swipe the card through the terminal or use a paper voucher.

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The customer will then key in their PIN, or sign, to indicate their agreement to proceed with the transaction. An authorization code will be given to the merchant for the transaction by the cardholder’s card issuer that will appear on the terminal receipt that is handed to the cardholder. The card issuer will debit the transaction to the cardholder’s account.

Retailer / Merchant

A merchant sells goods or services to their customer (the cardholder). This can be face-to-face in a shop on the high street, where both the cardholder and their card are present, or when taking orders remotely e.g. over the phone for a restaurant take away, a mail order from a catalogue, or a purchase over the internet. In this example, it is a card not present transaction.

The card transaction’s details are entered into the merchant’s terminal, usually, sent via the telephone line to their acquiring bank who will process the transaction and send it on to the relevant card issuer for authorization and settlement.

Acquirer

A merchant will have negotiated a Merchant Service Agreement with their acquiring bank to process payment card transactions on their behalf. Typically, this agreement will also include the acquiring bank providing one of its own terminals, known as a bank owned terminal.

An acquiring bank is responsible for receiving the card transaction details from the merchant’s terminal, passing these through to the card issuer (the cardholder’s bank or building society) via the card scheme for authorization and completing the processing of the transaction.

An acquiring bank will arrange the card transaction’s settlement and will, typically, credit the merchant’s nominated bank account with the funds within four working days.

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An acquiring bank will also deal with any chargeback’s or requests for information (RFI) that they may receive from card issuers on any of their merchant’s transaction

Card Scheme

Card Schemes are organizations who manage and control the operation and clearing of card payment transactions according to card scheme rules.

The Card Schemes are responsible for passing card transaction details from the acquiring bank to the issuer and for passing payment back to the acquiring bank who in turn pays this to the merchant.

American Express, Diners Club, JCB, Maestro, MasterCard and Visa (including Electron or Debit) are the card schemes that operate in the UK.

Issuer

The issuer is the bank, building society or financial organization that provides a payment card (debit, credit, pre-paid or charge card) to their customer or cardholder.

The issuer has responsibility for transactions made on cards that they have issued, and will be responsible for debiting funds from the relevant cardholder's account.

Note: For American Express and Diners Club - the transaction process is slightly different as they act as card scheme, issuer and acquiring bank at the same time. An acquiring bank will be able to explain more about accepting these card types.

Parties involved

Cardholder

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The owner of the card used to make a purchase; the consumer.

Card-issuing bank

A Financial institution or any other organization which issue credit cards to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case.

Merchant

The individual or business accepting credit card payments for products or services sold to the cardholder

Acquiring bank

The financial institution which accept payment for the products or services on behalf of the merchant.

Independent sales organization

Resellers (to merchants) of the services of the acquiring bank.

Merchant account provider

This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with.

Credit Card association

An association of card-issuing banks such as Visa, MasterCard, Discover, American express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.

Transaction network

The system that implements the mechanics of the electronic transactions, May be operated by an independent company, and one

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company may operate multiple networks. Transaction processing networks include: Cardnet, Nabanco, Omaha, Paymentech, NDC Atlanta, Nova, Vital, Concord EFSnet, and VisaNet.

Affinity partner

Some institutions lend their name to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities and charities.

The flow of information and money between these parties — always through the card associations — is known as the interchange, and it consists of a few steps.

SPECIMEN OF CREDIT CARD

An example of the front in a typical credit card:

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1. Issuing bank logo2. EMV chip

3. Hologram

4. Credit card number

5. Card brand logo

6. Expiry Date

7. Cardholder's name

An example of the reverse side of a typical credit card:

1. Magnetic Stripe2. Signature Strip

3. Card Security Code

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7.6 Advantages and Disadvantages of Credit Card

A credit card from VISA, MasterCard, or any other network allows you to pay for purchases or services by borrowing from the credit card company. You then repay by making monthly payments towards the amount borrowed. That is, you do not have to repay the whole borrowed amount in full at one go.

Then there are charge cards, such as the American Express card, that require full payment of the borrowed amount each month.

Either way, the credit card is a very convenient alternative to paying by cash.

Essentially a credit card allows you to:

Purchase products or services whenever and wherever you want, without ready cash and paying for them at a later date.

Have the option of paying only a part of the total expenses. The balance amount can be carried forward, with an interest charged.

Withdraw cash whenever, wherever you are, through ATMs and other withdrawal centers.

Enjoy a revolving credit limit without any charges for a limited period (mostly 20 to 50 days)

Transact money of more than one currency, from one country to another.

Other facilities afforded on a credit card include reward points on card usage, insurance cover against air and road accidents, loss of baggage, and so on. All credit cards have built-in safety features like signatures and personal identification numbers.

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Advantages of Credit Cards

Credit cards offer enormous benefits to users and bankers alike.

1. Benefits to Cardholders

Shopping convenience:

Credit cards are convenient to use. They dispense with the need to carry large amount of cash or issue cheques. Shopping is made comfortable as purchasing poses no difficulty, since cards have wide acceptance.

Credit facility:

Credit cards offer a convenient mode of credit to customers. The customer need not go to the bank to apply for a loan that requires repayment in fixed installments. The credit card enables the cardholder to avail the credit facility sanctioned by the card issuing company. The customer can either repay the amount of credit in full, or can opt for repaying it in flexible monthly installments.

Safety:

Credit cards allow for a safe means of conducting transactions. Credit cardholders need not want to take a large amount of cash with them.

Meticulous record:

Credit cards facilitate meticulous and easy record keeping. The transactions are printed on a monthly statement that can be reconciled with the sales receipts issued by merchants. Thus, the accumulated interactions are easily accounted for every month.

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Acceptability:

Merchant establishment widely accept VISA and MasterCard. This makes it very convenient for holding a credit card.

2. Benefits to Merchants:

Enhanced Sales:

The credit card mechanism makes the buying process convenient and easy. This in turn helps boost up the sales of business concerns as it increases purchasing power.

Easy validation :

The electronic system, which is the backbone of credit card operation, allows for easy verification of details about the customer. This greatly facilitates sale transactions by merchants.

No risk:

As there is no direct contact of the merchant establishment with collection of payments on credit cards, there is no risk to the merchant in accepting credit facility.

3. Benefits to issuer Banks:

Source of income :

Credit cards provide an easy way to extend credit to customers. The credit, once granted, keeps revolving which results in the bank earning income through interest.

Market expansion:

Credit cards do not require the physical presence of a bank branch. Credit cards can be used by banks to increase their market presence.

Cross - selling:

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Credit cards provide ample opportunity to banks for generation of additional revenue. This is possible by cross – selling other banking products and services to its existing and potential cardholders.

Disadvantages:

You may become an impulsive buyer and tend to overspend because of the ease of using credit cards. Cards can encourage the purchasing of goods and services you cannot really afford.

Lost or stolen cards may result in some unwanted expense and inconvenience.

The use of a large number of credit cards can get you even further into debt.

Using a credit card, especially remotely, introduces an element of risk as the card details may fall into the wrong hands resulting in fraudulent purchases on the card. Fraudulent or unauthorized charges may take months to dispute, investigate, and resolve.

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8. INTRODUCTION TO CREDIT CARD INDUSTRY

7.1 History

Our society was once upon a time functioning without money; it is

again likely to become moneyless. While ancient society was

confronted with the problems of adjusting mutually satisfactory rates

and basis of exchange, future society, with the help of computers,

electronics and telecommunications, credit cards, telephone and

other modern means of communications, would settle financial

transactions instantly. Money as a medium of exchange will serve its

function. The difference will be that in future coins, currency notes,

cheques, etc., will be dispensed with in favour of records. India has

entered the stage of credit card system and credit cards are gaining

increasing relevance to facilitate industrial, commercial and

agricultural transactions.

Credit was first used in Assyria, Babylon and Egypt 3,000 years

ago. The bill of exchange – the forerunner of bank notes - was

established in the 14th century. Debts settled by one-third cash and

two-thirds bill of exchange paper money followed only in the 17th

century. The first advertisement for credit was placed in 1730 by

Christopher Thornton who offered furniture that could be paid off

weekly.

In the 1920s shopper’s plate – “buy now, pay later” system – was

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introduced in USA. It could only be used in shops which issued it.

The credit card was the successor of a variety of merchant credit

schemes. It was first used in the 1920s, in the United States,

specifically to sell fuel to a growing number of automobile owners. In

1938 several companies started to accept each other's cards. The

concept of paying merchants using a card was invented in 1950 by

Ralph Schneider and Frank X. McNamara in order to consolidate

multiple cards. The Diners Club, which was created partially through

a merger with Dine and Sign, produced the first "general purpose"

charge card, which is similar but required the entire bill to be paid

with each statement; Western Union had begun issuing charge

cards to its frequent customers in 1914.

MasterCard came to being in 1966 when a group of credit-issuing

banks established Master Charge. The fractured nature of the US

banking system meant that credit cards became an effective way for

those who were travelling around the country to move their credit to

places where they could not directly use their banking facilities. In

1966 Barclaycard in the UK launched the first credit card outside of

the US.

There are now countless variations on the basic concept of

revolving credit for individuals including organization-branded credit

cards, corporate-user credit cards, and store cards and so on.

In contrast, because of the legislative framework surrounding

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banking system overdrafts, some countries, France in particular,

were much faster to develop and adopt chip-based credit cards

which are now seen as major anti-fraud credit devices.

8.2 Credit Cards Industry in India

Credit card or the plastic money, as it is popularly referred to, was

slow to enter the Indian market because of the high sentimental

value that Indian consumers attach to hard cash. Prevalence of

small value transaction, credit shy culture and inadequate banking

habits of the population were other hindrances.

Credit cards arrived in India about two decades ago. In the early

stages its growth was very slow in terms of number and value. Even

the number of players was limited and mainly foreign banks like

HSBC, Citibank and Standard Chartered Bank dominated the

market. Indian banks did not show much interest in the product in

the initial stages. This is evident from the fact that it took State Bank

of India (SBI), India’s largest bank, almost a decade to begin dealing

in credit cards. SBI, despite its widespread reach, has aggressively

started promoting credit cards only three years ago.

However, in the recent past the scenario has changed dramatically.

The number of nationalized and private banks issuing credit cards

has increased significantly. Credit cards are now not only integral

parts of the consumer’s life in metros, but even residents of smaller

cities and towns have taken to them. This can be attributed to the

aggressive strategy of nationalized and private banks to promote

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card products in smaller town and cities. These banks have far

wider reach and depth in smaller cities and town as compared to

foreign banks. They have capitalized on this advantage to play a

major role in expanding the credit card base in terms of number and

usage in smaller cities and town.

Transactions using plastic money involve the payment of a small fee

to the issuing bank in the form of an application/joining fee and an

annual fee. Consumers collect a percentage-based commission in

the form of reward points for card usage at shops/establishments.

The usage of credit card is very simple and easy. The consumers do

not have to carry cash and can use the card to pay their

shopping/restaurant bills. All you are required to do is give your

credit card at the payment counter, the person handling the counter

swipes the card into the system to check the details of the card and

you need to sign on the bill. The payment is done electronically.

With only a signature your payment is taken care of. Isn’t it very

simple? Yes it is, but everyone isn’t eligible for a credit card. There

are certain requirements, varying across banks, to get a credit card.

Typically credit card companies (or issuing banks, as they are

known) require the applicant to have a minimum income level before

he can apply for the card. Proof of income is given by way of

documents. These documents could be a copy of tax return filed;

salary slips if applicable, balance sheet and profit and loss account

detail if you are self-employed. These serve as the starting point

while applying for a card. The minimum income level varies from

bank to bank and fluctuates between Rs 60,000 - 150,000 per

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annum depending upon your risk profile and the type of card. This

requirement helps the issuing bank to assess whether or not you will

be able to repay the expenses incurred through your credit card. In

addition to income eligibility, you need to be at least 21 years of age

(maximum 65 years).

There is no doubt that credit cards are very convenient, especially in

case of daily expenses. In addition you earn bonus points while you

spend via the card. It is because of these reasons that in the recent

past card usage has increased dramatically. In fact, plastic currency

has almost wiped off hard currency from the US, resulting in far less

expenditure associated with cash transactions.

Currently, six major bishops are ruling the card empire – HDFC,

ICICI, Citibank, Standard Chartered Bank, HSBC and State Bank of

India (SBI).

The robust growth in the Indian economy is also witnessed in the

credit card industry. Higher disposable income by relatively younger

workforce in Mid 20s has made India a perfect market for credit card

companies.

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8.3 Statistics and Projections of the Indian credit card industry

India is currently the fastest growing Mobile Market in the world and is also among the fastest growing credit card markets in the world.

•India has a total approx.75 million cards under circulation (25 million credit and 50 million debit) and a 30% year-on-year growth.

•With 87% of all transactions in plastic money happening through credit cards, debit cards in India continue to be used largely for cash withdrawals.

•Though Visa, which accounts for 70% of the total card industry is the market leader in India; MasterCard is fast catching up.

•Every transaction involves payment of an interchange charge to MasterCard or Visa for settlement, which amounted to about $50 million during the year. A domestic card payment settlement company would save the outgo on commission paid to Visa and MasterCard, a senior banker said.

•India is still under penetrated as far as cards are concerned. Today the country has less than 1 per cent of personal consumption expenditure (PCE) happening on cards. This compares very poorly with the global average of 5 per cent PCE on cards and is miniscule when compared to the 15 per cent PCE of developed nations.

•Senior bankers feel that very few Indians carry a credit card, with the penetration level being as low as over 2 per cent while that for comparable economies, it stands at 10-12 per cent.

•Though the penetration level is lower, the spend pattern of Indians is more or less in synch with the international spends, with travel, entertainment, retail shopping and jewellery being the top categories where credit cards are used.

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•Bankers expect their credit card business to grow by over 30 per cent in 2007-08. Credit cards have seen a gradual growth from about 3.5million in 2000 to 25 million in 2007. Internal estimates of Barclaycard have pegged the Indian market with potential to grow to atleast 55million credit cards by 2010-11.

•Not just the number of users have increased, but also the average credit has gone up from $368(Rs16,560) in 2000 to approximately $450(Rs20,250) in 2007.

Indians spend just 1% of their total purchases through credit cards

while the Koreans make one-fifth of their total purchases through credit

cards. The world average hovers around 9%.

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8.4 Credit Card Operations of banks- Guidelines 21 st July 2010

Pursuant to the announcement made in the Annual Policy

Statement 2009-10, the Reserve Bank of India had constituted a

Working Group on Regulatory Mechanism for Cards. The Group has

suggested various regulatory measures aimed at encouraging

growth of credit cards in a safe, secure and efficient manner as well

as to ensure that the rules, regulations, standards and practices of

the card issuing banks are in alignment with the best customer

practices. The following guidelines on credit card operations of

banks have been framed based on the recommendations of the

Group was also the feedback received from the members of the

public, card issuing banks and others. All the credit card issuing

banks / NBFCs should implement these guidelines immediately.

Guidelines for Implementation

Fair Practices Code

Each bank must have a well documented policy and a Fair Practices Code for credit card operations. The Banking Codes and Standards of India (BCSBI) has released a “Code of Bank’s Commitment to Customers”(Code) in July 2006 as also a Guidance Note in December 2006, which have been adopted by most of the banks with the approval of their Boards. Such of the banks which have subscribed to the BCSBI Code may incorporate the principles contained in BCSBI Code for

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evolving their Fair Practices Code for credit card operations, in lieu of IBA Fair Practices Code for credit card operations. The banks’ Fair Practices Code, should at a minimum, incorporate the relevant guidelines contained in this Master Circular. Banks/NBFCs should also widely disseminate the contents of this Master Circular, including through their websites.

Issue of cards

a. Banks/NBFCs should ensure prudence while issuing credit cards and independently assess the credit risk while issuing cards to persons, especially to students and others with no independent financial means. Add-on cards i.e. those that are subsidiary to the principal card, may be issued with the clear understanding that the liability will be that of the principal cardholder.

b. Banks have been advised that in case of all categories of loans irrespective of any threshold limits, including credit card applications, banks should convey in writing the main reason/reasons which in the opinion of the bank have led to the rejection of the loan applications. It is reiterated that banks should convey in writing the main reason/reasons which have led to the rejection of the credit card applications.

c. As holding several credit cards enhances the total credit available to any consumer, banks/NBFCs should assess the credit limit for a credit card customer having regard to the limits enjoyed by the cardholder from other banks on the basis of self declaration/ credit information.

d. The card issuing banks/NBFCs would be solely responsible for fulfillment of all KYC requirements, even where DSAs / DMAs or other agents solicit business on their behalf.

e. While issuing cards, the terms and conditions for issue and usage of a credit card should be mentioned in clear and simple language (preferably in English, Hindi and the local language) comprehensible to a card user. The Most Important Terms and

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Conditions (MITCs) termed as standard set of conditions, as given in the Annex, should be highlighted and advertised/ sent separately to the prospective customer/ customers at all the stages i.e. during marketing, at the time of application, at the acceptance stage (welcome kit) and in important subsequent communications.

Interest rates and other charges

Credit card dues are in the nature of non-priority sector personal loans and as such, upto June 30, 2010, banks were free to determine the rate of interest on credit card dues without reference to their BPLR and regardless of the size in terms of the Master Circular on Interest rates on advances However, banks have been advised that Base Rate system will replace the BPLR system with effect from July 01, 2010. All categories of loans should henceforth be priced only with reference to the Base Rate except:

a) DRI advances b) Loans to banks own employees c) Loans to bank's depositors against their own deposits.

Banks are advised to be guided by the instructions contained in

the circular dated April 09, 2010 while determining the interest

rate on Credit Card dues. Banks have also been advised that they

should prescribe a ceiling rate of interest, including processing

and other charges, in respect of small value personal loans and

loans similar in nature. The above instructions are applicable to

credit card dues also. In case, banks/ NBFCs charge interest

rates which vary based on the payment/ default history of the

cardholder, there should be transparency in levying of such

differential interest rates. In other words, the fact that higher

interest rates are being charged to the cardholder on account of

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his payment / default history should be made known to the

cardholder. For this purpose, the banks should publicize through

their website and other means, the interest rates charged to

various categories of customers. Banks/NBFCs should upfront

indicate to the credit card holder, the methodology of calculation

of finance charges with illustrative examples, particularly in

situations where a part of the amount outstanding is only paid by

the customer.

Further, the banks/NBFCs have to adhere to the following

guidelines relating to interest rates and other charges on credit

cards:

a. Card issuers should ensure that there is no delay in dispatching

bills and the customer has sufficient number of days (at least one

fortnight) for making payment before the interest starts getting

charged. In order to obviate frequent complaints of delayed billing,

the credit card issuing bank/NBFC may consider providing bills

and statements of accounts online, with suitable security built

therefore. Banks/ NBFCs could also consider putting in place a

mechanism to ensure that the customer’s acknowledgement is

obtained for receipt of the monthly statement.

b. Card issuers should quote Annualized Percentage Rates (APR)

on card products (separately for retail purchase and for cash

advance, if different). The method of calculation of APR should be

given with a couple of examples for better comprehension. The

APR charged and the annual fee should be shown with equal

prominence. The late payment charges, including the method of

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calculation of such charges and the number of days, should be

prominently indicated. The manner in which the outstanding

unpaid amount will be included for calculation of interest should

also be specifically shown with prominence in all monthly

statements. Even where the minimum amount indicated to keep

the card valid has been paid, it should be indicated in bold letters

that the interest will be charged on the amount due after the due

date of payment. A legend/notice to the effect that " Making only

the minimum payment every month would result in the repayment

stretching over -------- years with consequent interest payment on

your outstanding balance" should be prominently displayed in all

the monthly statements so as to caution the customers about the

pitfalls in paying only the minimum amount due.

c. Banks/NBFCs should step up their efforts on educating the

cardholders of the implications of paying only ‘the minimum

amount due’. The “Most Important Terms and Conditions” should

specifically explain that the ‘free credit period’ is lost if any

balance of the previous month’s bill is outstanding. For this

purpose, banks/ NBFCs could work out illustrative examples and

include the same in the Welcome Kit sent to the cardholders as

also place it on their website.

d. The banks /NBFCs should not levy any charge that was not

explicitly indicated to the credit card holder at the time of issue of

the card and without getting his / her consent. However, this

would not be applicable to charges like service taxes, etc. which

may subsequently be levied by the Government or any other

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statutory authority.

e. The terms and conditions for payment of credit card dues,

including the minimum payment due, should be stipulated so as to

ensure that there is no negative amortization.

f. Changes in charges (other than interest) may be made only with

prospective effect giving notice of at least one month. If a credit

card holder desires to surrender his credit card on account of any

change in credit card charges to his disadvantage, he may be

permitted to do so without the bank levying any extra charge for

such closure. Any request for a closure of a credit card has to be

honored immediately by the credit card issuer, subject to full

settlement of dues by the cardholder.

g. There should be transparency (without any hidden charges) in

issuing credit cards free of charge during the first year.

Wrongful billing

The card issuing bank / NBFC should ensure that wrong bills are not

raised and issued to customers. In case, a customer protests any

bill, the bank / NBFC should provide explanation and, if necessary,

documentary evidence to the customer within a maximum period of

sixty days with a spirit to amicably redress the grievances.

Use of DSAs / DMAs and other agents

a. When banks / NBFCs outsource the various credit card operations,

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they have to be extremely careful that the appointments of such

service providers do not compromise with the quality of the

customer service and the bank / NBFC’s ability to manage credit,

liquidity and operational risks. In the choice of the service provider,

the bank / NBFCs have to be guided by the need to ensure

confidentiality of the customer’s records, respect customer privacy,

and adhere to fair practices in debt collection.

b. In terms of the BCSBI’s Code of Bank’s Commitment to Customers,

banks which have subscribed to the Code are required to prescribe

a Code of Conduct for their Direct Sales Agents (DSAs) whose

services are engaged by banks for marketing their

products/services. Banks should ensure that the DSAs engaged by

them for marketing their credit card products scrupulously adhere to

the banks’/NBFCs’ own Code of Conduct for Credit Card operations

which should be displayed on the individual bank’s/NBFC’s website

and be available easily to any credit card holder.

c. The bank / NBFC should have a system of random checks and

mystery shopping to ensure that their agents have been properly

briefed and trained in order to handle with care and caution their

responsibilities, particularly in the aspects included in these

guidelines like soliciting customers, hours for calling, privacy of

customer information, conveying the correct terms and conditions of

the product on offer, etc.

Redressal of Grievances

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a. Generally, a time limit of sixty (60) days may be given to the

customers for preferring their complaints grievances.

b. The card issuing bank / NBFC should constitute Grievance

Redressal machinery within the bank / NBFC and give wide publicity

about it through electronic and print media. The name and contact

number of designated grievance redressal officer of the bank /

NBFC should be mentioned on the credit card bills. The designated

officer should ensure that genuine grievances of credit card

subscribers are redressed promptly without involving delay.

c. Banks/NBFCs should ensure that their call centre staff are trained

adequately to competently handle all customer complaints.

d. Banks/NBFCs should also have a mechanism to escalate

automatically unresolved complaints from a call center to higher

authorities and the details of such mechanism should be put in

public domain through their website.

e. The grievance redressal procedure of the bank / NBFC and the time

frame fixed for responding to the complaints should be placed on

the bank / NBFC's website. The name, designation, address and

contact number of important executives as well as the Grievance

Redressal Officer of the bank / NBFC may be displayed on the

website. There should be a system of acknowledging customers'

complaints for follow up, such as complaint number / docket

number, even if the complaints are received on phone.

f. If a complainant does not get satisfactory response from the bank /

NBFC within a maximum period of thirty (30) days from the date of

his lodging the complaint, he will have the option to approach the

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Office of the concerned Banking Ombudsman for redressal of his

grievance/s. The bank / NBFC shall be liable to compensate the

complainant for the loss of his time, expenses, financial loss as well

as for the harassment and mental anguish suffered by him for the

fault of the bank and where the grievance has not been redressed in

time.

Internal control and monitoring systems

With a view to ensuring that the quality of customer service is

ensured on an on-going basis in banks / NBFCs, the Standing

Committee on Customer Service in each bank / NBFC may review

on a monthly basis the credit card operations including reports of

defaulters to the CIBIL, credit card related complaints and take

measures to improve the services and ensure the orderly growth in

the credit card operations. Banks / NBFCs should put up detailed

quarterly analysis of credit card related complaints to their Top

Management. Card issuing banks should have in place a suitable

monitoring mechanism to randomly check the genuineness of

merchant transactions.

Right to impose penalty

The Reserve Bank of India reserves the right to impose any penalty

on a bank / NBFC under the provisions of the Banking Regulation

Act, 1949/the Reserve Bank of India Act, 1934, for violation of any of

these guidelines.

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8.5 Credit card market in India

Market Share

The Top 10 Credit Card Issuers in India are as follows,

ICICI Bank - 5.07 Mn

HDFC Bank - 4.42 Mn

SBI Cards - 2.65 Mn

Citibank - 2.54 Mn

HSBC Cards - 1.3 Mn

StanChart Credit Cards - 1.1 Mn

ABN Amro - 0.78 Mn

Axis Bank - 0.57 Mn

Deutsche Bank - 0.495 Mn

American Express - 0.45 Mn

Industry Spend

The total spends in the payment industry for the year 2009-10 crossed

Rs. 51,000 crores at the POS. This reflects a growth of 53% over the

previous year. ICICI Bank is the leader in capturing maximum spends

with 32% market share, followed by Citibank at 20% market share. The

combined share in terms of spends of the MNC Banks is about 43%.

India currently has over 240 lakh credit cardholders, who make

purchases totalling Rs. 33,000 crores per annum. Compared to the

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Asian market, the card market in India is at a nascent stage. Total card

credit in India is only at around 1.22% of Asian credit.

Market for credit cards in India is made up of 18 major banks and

financial institutions providing credit card products and services. There

are 11 major types of credit cards available in India.

Major Credit Card Providers in India

Following are major credit card providers in India:

- ABN AMRO

- American Express

- AXIS BANK

- Bank of Baroda

- Bank of India

- Bank of Maharashtra

- Barclays

- Canara Bank

- Central Bank of India

- Citi Bank

- Corporation Bank

- Deutsche Bank

- HDFC Bank

- HSBC Bank

- ICICI Bank

- Indian Bank

- Indian Overseas Bank

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- Jammu & Kashmir Bank

- Kotak Mahindra Bank

- Punjab National Bank

- Reliance Capital Ltd.

- Royal Bank of Scotland

- Standard Chartered Bank

- State Bank of India

- Syndicate Bank

- Union Bank of India

- Vijaya Bank

Major Indian Credit Card Types

Following are various types of credit cards available in India:

Premium Credit Cards

Cash Back Credit Cards

Gold Credit Cards

Airline Credit Cards

Silver Credit Cards

Business Credit Cards

Balance Transfer Credit Cards

Co-branded Credit Cards

Low Interest Credit Cards

Lifetime Free Credit Cards

Rewards

There are some additional credit cards that are available in India as

well. Rewards credit cards available in India can be subdivided into six

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categories – Points, Hotels and Travels, Retail, Auto and Fuel.

A number of banks are offering low interest credit cards in India in order

to help the cardholders manage their finances in a better way. These

cards are highly availed by Indian consumers on account of their low

interest rates.

Various types of credit card schemes offered by different banks:-

1. HDFC BANK

HDFC Bank is bringing out eleven credit card products in India. These

cards offer a wide range of benefits and rewards for cardholders.

HDFC Bank Silver Credit Card

Following are some features of HDFC Bank Silver Credit Card:

5% cash back on your Monthly household purchase.

5% cash back on mobile bill payments through smartpay

Get 5 reward points for every Rs.100 spent above Rs.5,000 in a

month. For spends up to Rs 5,000 in a month you get 2 reward

points per Rs 100 spent.

You can also redeem your accumulated reward points for air

miles on leading airlines like Jet Airways, Air India, Kingfisher

Airlines and Air Sahara.

HDFC Gold Business Credit Card

Following are some facts about HDFC Bank Gold Credit Card:

Get up to Rs 10 lakh as credit limit on the card on the basis of the

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company/business financial.

Withdraw cash up to 40% of your credit limit at a very nominal

charge from any one of HDFC ATMs.

Petrol Surcharge Waiver

Business Insurance Cover

Travel Insurance Cover

You will earn 1 reward point for every Rs 200 spent on your card.

HDFC Bank Titanium Credit Card

Following are salient features of HDFC Bank Titanium Credit Card:

Golf Course Referral and Reservation

Flowers and Gift Delivery Service

Dining Referral and Reservation Service

Lost Card Liability

Zero petrol surcharge

If your billing for the month is greater than Rs 10,000, you earn 5

points for every Rs 100 spent incrementally.

HDFC Woman’s Gold Credit Card

Following are some features of HDFC Woman’s Gold Credit Card:

5% cash back on your Monthly household purchase

5% cash back on mobile bill payments through smartpay

Get 5 reward points for every Rs.100 spent above Rs.5,000 in a

month. For spends up to Rs 5000 in a month you get 2 reward

points per Rs 100 spent.

You can also redeem your accumulated reward points for air

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miles on leading airlines like Jet Airways, Air India, Kingfisher

Airlines etc.

Following are some other credit cards provided by HDFC Bank in India:

HDFC Bank Health Plus Credit Card

HDFC Bank Platinum Plus Credit Card

HDFC Bank Corporate Credit Card

HDFC Bank Visa Signature Credit Card

HDFC Bank Gold Business Credit Card

HDFC Bank Value Plus Credit Card

2. ICICI BANK

ICICI Bank is issuing 29 separate credit cards in India. These cards

cater to a wide client base including sports lovers and businessmen for

example.

ICICI Signature Credit Card

Following are some points on ICICI Signature Credit Card:

Welcome aboard with the following 'Red Carpet' Privileges:

o 30,000 Reward Points, which you can redeem for any reward

from the ICICI Bank 'Hand-Picked Rewards Catalogue', an

exclusive catalogue for premium cardholders. Exclusive options

against 30,000 Hand-Picked Rewards for ICICI Bank Signature

Credit cardholders - Tag Hueur or Raymond Weil watches, Mont

Blanc accessories

o International Golf Fee card with two year membership that powers

travel, golfing and leisure benefits

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o Priority Pass that provides access to more than 600 of the world's

exclusive airport lounges. Complete waiver of lounge access

changes when you book your international air ticket on your

Signature Card.

Powerful rewards programme: Earn up to 10 Hand-Picked

Rewards per Rs. 100 spent on your Signature Card. To know

how.

Redeem rewards against premium brands from the exclusive

`Hand-Picked Rewards’ catalogue. Every 1100 Hand-Picked

Rewards gives Rs 1000 worth of vouchers.

Air-accident insurance of Rs. 3 crore.

Complimentary companion ticket on booking at

www.pvrcinemas.com* note: Till Sep 09. For detailed terms and

conditions, please refer to www.pvrcinemas.com

Save time with I-Assist: 24x7 personal concierge services,

offering a host of benefits including international medical services,

exclusively for ICICI Bank Signature Credit cardholders.

ICICI Bank Platinum Credit Card

Following are some features of ICICI Bank Platinum Credit Card:

High credit limit and cash limit

1 reward point for every Rs. 100 spent

Air-accident insurance of up to Rs. 40 lakh

Fuel-surcharge waiver across all petrol pumps

Late payment Charges - 30% of minimum amount outstanding

(subject to min. of Rs. 350 and max. of Rs. 600).

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Following are other credit cards issued by ICICI Bank in India:

ICICI BANK Travel Smart Gold Credit Card

ICICI Bank Titanium Credit Card

ICICI Bank Solid Gold Credit Card

ICICI Bank Signature Credit Card

ICICI Bank Platinum Premiere Credit Card

ICICI BankOnline Credit Card

ICICI Bank Visa Mini Card

ICICI Bank Central Credit Card

ICICI PRU life Credit Card

ICICI Bank True Value Credit Card

3. SBI

Some of SBI credit cards are:-

SBI Platinum Credit Card

Following are some features of SBI Platinum Credit Card:

From leading fashion labels to little souvenirs, buy anything you

feel like when you’re travelling abroad using your SBI Platinum

Card, and get 2% Cash Back.

The most powerful rewards programme makes shopping on your

SBI Card even better. Get Power Points for every purchase you

make. Earn one power point on every Rs. 50 spent on your SBI

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Card

With your SBI Card you have instant access at 1 million Visa

ATMs worldwide including over 18,000 Visa ATMs in India and

more than 10,000 State Bank ATMs spread across more than 100

cities in India.

Access your account on the net from the comfort of your office or

home. Track your spends through password protected PDF

statements; get special offers via SMS and e-mails.

Buy anything that catches your fancy and make your repayments

in easy monthly installments. Choose the plan that suits you best.

Take advantage of a low interest rate.

SBI Gold Credit Card

Following are some features of SBI Gold Credit Card:

Cash Back in Departmental Stores & Groceries

Be it the plush Departmental store or a humble grocery, if they

accept credit cards get a 2% Cash Back.

Reward Points

The most powerful rewards programme makes shopping on your

SBI Gold & More Card even better. Earn one reward point on

every Rs. 75 spent on your SBI Gold & More Card on all

merchants other than departmental stores and groceries, and

redeem these reward points against a host of Rewards.

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SBI Silver Credit Card

Following are some features of SBI Silver Credit Card:

Reward Points

The most powerful rewards programme makes shopping on your

SBI Silver & More Card even better. Earn one reward point on

every Rs. 100 spent on your SBI Silver & More Card on all

merchants other than departmental stores and groceries, and

redeem these reward points against a host of Rewards.

Cash on the go

As an SBI Cardholder, you can withdraw cash from over 1 million VISA/MasterCard ATMs across the globe, including 18,000 ATMs in India. In addition to this, you get access to over 10,000 SBI ATMs across 100 plus cities in India.

4. HSBC

Some of HSBC credit cards are:-

HSBC Platinum Credit Card

Following are some features of HSBC Platinum Credit Card:-

The HSBC Platinum Enhanced Rewards Programme gives you the following

    2 points for every Rs 150 spent

    Reward points validity for 3 years

The HSBC Platinum Credit Card comes to you at a special

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interest rate of only 2.75% per month

HSBC Gold Credit Card

Following are some features of HSBC Gold Credit Card:-

Low Interest Credit Card

Save on credit card interest payments by availing of lower interest options such as Loan on Phone and Balance Transfer.

Balance Transfer-on-EMI Balance Transfer-on-EMI is a unique feature that allows you to transfer the outstanding balance from your other credit card to your HSBC Credit Card and repay it in easy monthly instalments at a lower interest rate.

Repayment tenure options of 6, 12, 18 and 24 months

Low interest rates

Loan on Phone

The 'Loan on Phone' feature makes it easy for you to do high value shopping. Any purchases above Rs. 2000 can be paid back in easy monthly installments at low interest rates.

In Indian credit card market there are 12 major types of credit cards

being provided by banks and financial institutions. These cards provide

a wide variety of financial benefits to holders.

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8.6 Credit Card Frauds

There is an international racket of cyber criminals. Credit card

information in India is sold to cyber criminals in other countries. The

information is misused for carrying out major financial frauds. . Due to

lack of awareness, people submit personal details and credit card

information to fraudulent emails. Sometimes, fraudsters steal credit

card information. Some fraudsters go through trash to find discarded

receipts or carbon for obtaining information and then use the account

number illegally.

There were underground “carder” forums where credit card numbers

are bought and sold. These forums bring together people who steal the

numbers and those who use them. An individual researcher in cyber

crime and cyber laws, Patil said economic offences using credit cards

have increased in India and countries like US. An FBI report indicated

that credit cards were largely responsible for the $ 315 billion loss the

US endured from financial fraud in 2005. A study in Europe revealed

that over 22 million customers felt victim to credit card fraud in 2006.

“The numbers are increasing.

“The frauds are increasing because of problem faced in extradition of

cyber criminals from other countries. Even during the panel discussion

on cyber terrorism at the hacker’s convention, cyber law expert Rohas

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Nagpal said India was so far not associated with any extradition treaty

with a foreign country due which the cyber criminals in could not be

held. US expert Chris Goggans said even US is facing difficulties in

extradition of criminals.

Today plastic is the convenient, easy and fashionable alternative to

wads of paper. With one swipe, credit cards have changed the way we

live. Unfortunately, along with the convenience has come related crime.

Credit card fraud involves withdrawal of funds and obtaining of goods

and services by using an unauthorized account. Otherwise inaccessible

personal information stored on computers is stolen in order to use a

card. Due to the virtual explosion of credit card business throughout the

world, security has become critical in the entire process. There were

about 60 million credit card holders in the sixties and according to an

estimate, the number has gone up to more than a trillion now.

In India, credit card companies make a provision in their contract with

the client that they, the company, would not be liable for the fraudulent

transaction unless the client loses his/her card and reports the loss

immediately. Sometimes the banks and credit card companies try to

save their skin by inserting a clause in the relevant contract. This is

purported to absolve the company in case a fraud occurs on the stolen

card and the client fails to notify the loss in time. This unilateral

provision however has not stood the test of legal scrutiny. The courts

have placed the burden of loss on the issuers.

In India, the Mail Order Telephone Order (MOTO) type account for the

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bulk of credit card frauds. This occurs when the card is not actually

presented, but the details are given on the application form to buy

goods or services or when the transaction is done on the telephone.

Fraud through fake cards is not as rampant in India as in the USA.

Techniques have been developed whereby the number and other

information on the magnetic strip is erased and a new number is

embossed. When the card does not work on the swiping machine, the

merchant manually processes the details of the card to complete the

sale.

This procedure is called skimming of the cards. In the USA, identity

theft is also quite prevalent and is supposed to be one of the fastest

growing offences in America. The fraudsters adopt another person’s

identity to gain access to their monetary sources. In the case of online

transactions, ‘site cloning’ is resorted to where the site clone created is

made to look like the original site in order to obtain the credit card

details of unsuspecting customers. Similarly, false merchant sites are

also created where cheap goods lure customers into giving their card

details.

Scared by the ever increasing cases of credit card fraud, the affected

companies and banks have taken various steps to minimize it. Manual

reviews of the transactions on the card are undertaken, but this requires

a high level of human intervention and increases costs. In the USA,

Address Verification System (AVS) has been developed for use in the

‘card not present’ scenario

The system is designed to check whether the address given by the

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buyer matches with the one on record. Visa has devised a Payer

Authentication System based on PIN similar to the system used on

ATM cards. This is a channel between the bank and the customer used

to authorize online transactions. With the increase in cross border

ecommerce the issuers in India will have to update their arsenal to

combat the forgers on the same lines as their Western counterparts.

The Information Technology Act and Rules, passed in 2000, provide

penalties for the tampering of computer source documents and hacking

of computer systems. No specific mention has, however, been made of

Credit cards or financial transactions. The RBI has formed the Credit

Information Bureau of India (CIBIL) in collaboration with Dun and

Bradstreet who will maintain the records of all individuals who want to

avail of finance from banks and credit card companies in India.

Fantastic Example of Credit Card Fraud

Amit Tiwari had many names, bank accounts and clients. None of them

were for real. With a plan that was both ingenious and naïve, the 21-

year-old engineering student from Pune tried to defraud a Mumbai-

based credit card processing company, CC Avenue, of nearly Rs

900,000.He was arrested by the Mumbai Police on August 21, 2009

after nearly an year of hide and seek with CC Avenue. He's been

charged for cheating under Section 420. Amit was in custody till August

29, 2009

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Protect yourself from credit Card fraud by following the simple

suggestions given below:-

Do's

If you lose your credit card, please report the loss immediately.

When you dispose of a card at the time of renewal/up

gradation, please make sure to cut it diagonally before disposal.

Please keep your card in a safe place. Treat it as carefully as

you would treat your cash.

Please ensure the card is swiped in your presence.

Please make sure you conduct any ATM transaction in

complete privacy.

If your card is held back by the ATM, please inform the

concerned Call Center/Branch personnel immediately.

Before you use an ATM, please ensure that there are no

strange objects in the insertion panel of the ATM.

Please remember to take your Debit/Credit Card back after

completing your ATM transaction.

If you spot any suspicious looking people at or around any

ATM, please inform the security guard immediately.

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Please change your ATM PIN once every 3 months.

When you make any transactions, please make sure that the

charge slip is complete before signing.

Please pay attention to your billing cycles. Please follow up with

Bank’s Credit Cards Customer Care if your bills don't arrive on

time. A missing credit card bill could mean an identity thief has

taken over your account and changed your billing address to

cover his tracks.

Please be wary of promotional scams. Identity thieves may use

phony offers to get you to give them your personal information.

Please secure all personal information in your home, especially

if you have roommates, employ outside help or are having

service work done in your home.

Please sign your credit cards as soon as you get them.

Please check your cards periodically to make sure none are

missing.

Please destroy and dispose of copies of receipts, airline tickets,

travel itineraries and anything else that displays your card

numbers.

Please keep items with personal information in a safe place.

Please keep a list of all credit cards, account numbers, expiry

dates, and the customer service phone numbers in a secure

place so that you can quickly contact Bank’s Credit Cards

Customer Care in case your cards are lost or stolen.

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85 | P a g e

Don’ts

Please do not disclose your Credit Card Number/ATM PIN to

anyone.

Please do not hand over the card to anyone, even if he/she

claims to represent the Bank.

Never get carried away by strangers who try to help you use the

ATM machine.

Please do not write the ATM PIN on the card or on a paper

which you carry along with the card.

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Do's and don'ts for online transactions:

Always Bank's Netsafe feature for making online transactions. It

is safe and secure.

Preferably transact on sites which mandate validation of CVC2

value (the last 3 digits after the card number, mentioned on the

signature panel at the back of the card) or at websites that are

certified by Verified-by-Visa or MasterCard Secure Code.

Please be careful when providing personal information online.

Never give out your personal or account information to anyone

you do not trust. Please make sure that you verify a business's

legitimacy by visiting its web site, calling a phone number

obtained from a trusted source, and/or checking with a reliable

resource.

Please keep your passwords secret. Some online stores may

require you to register with them via a username and password

before buying. Online passwords should be kept secret from

outside parties the same way you protect your ATM PIN.

Please look for signs of security. Identify security clues such as

a lock image at the bottom of your browser, or a URL that begins

with https://. These signs indicate that only you and the

merchant can view your payment information.

Never send payment information via email. Information that

travels over the Internet (such as email) is not fully protected

from being read by outside parties. Most reputed merchant sites

use encryption technologies that will protect your private data

from being accessed by others as you conduct an online

transaction.

Please keep a record of your transactions. Just as you save

store receipts, you should keep records of your online

INDUSTRY ANALYSIS

Porter’s FIVE FORCE Analysis for Indian Credit Card Industry

87 | P a g e

BARGAINING POWER OF SUPPLIERS

-low supplier bargaining power

- few alternatives available

-subject to RBI rules & regulations

INDUSTRY RIVALRY

Intense competition

Many private, public

THREAT OF SUBSTITUTES

High threat from substitutes

THREAT OF NEW ENTRANT

-LOW BARRIERS TO ENTRY

- Govt. policies are supportive

-Globalization and liberalization policy

- High exit barriers

BARGAINING POWER OF CUSTOMERS

-High bargaining power

- Low switching cost

- Large no. of alternatives

-Homogenous services by banks

- Full information available with customers

Do's and don'ts for online transactions:

Always Bank's Netsafe feature for making online transactions. It

is safe and secure.

Preferably transact on sites which mandate validation of CVC2

value (the last 3 digits after the card number, mentioned on the

signature panel at the back of the card) or at websites that are

certified by Verified-by-Visa or MasterCard Secure Code.

Please be careful when providing personal information online.

Never give out your personal or account information to anyone

you do not trust. Please make sure that you verify a business's

legitimacy by visiting its web site, calling a phone number

obtained from a trusted source, and/or checking with a reliable

resource.

Please keep your passwords secret. Some online stores may

require you to register with them via a username and password

before buying. Online passwords should be kept secret from

outside parties the same way you protect your ATM PIN.

Please look for signs of security. Identify security clues such as

a lock image at the bottom of your browser, or a URL that begins

with https://. These signs indicate that only you and the

merchant can view your payment information.

Never send payment information via email. Information that

travels over the Internet (such as email) is not fully protected

from being read by outside parties. Most reputed merchant sites

use encryption technologies that will protect your private data

from being accessed by others as you conduct an online

transaction.

Please keep a record of your transactions. Just as you save

store receipts, you should keep records of your online

KEY POINTS:

Supply:

Credit policies are decided by banks in consultation with the Reserve Bank

of India (RBI).

Demand:

India is a growing economy and demand for household credit is high

though it could be cyclical.

Barriers to entry:

Licensing requirement, Investment in technology and Branch network.

Bargaining power of suppliers:

Few suppliers are available such as MasterCard, Visa, and Amex etc.

Bargaining power of customers:

For good creditworthy borrowers bargaining power is high due to the

availability of large number of banks and credit card providers.

Competition- High

There are public sector banks, private sector and foreign banks competing

in similar business lines.

88 | P a g e

Do's and don'ts for online transactions:

Always Bank's Netsafe feature for making online transactions. It

is safe and secure.

Preferably transact on sites which mandate validation of CVC2

value (the last 3 digits after the card number, mentioned on the

signature panel at the back of the card) or at websites that are

certified by Verified-by-Visa or MasterCard Secure Code.

Please be careful when providing personal information online.

Never give out your personal or account information to anyone

you do not trust. Please make sure that you verify a business's

legitimacy by visiting its web site, calling a phone number

obtained from a trusted source, and/or checking with a reliable

resource.

Please keep your passwords secret. Some online stores may

require you to register with them via a username and password

before buying. Online passwords should be kept secret from

outside parties the same way you protect your ATM PIN.

Please look for signs of security. Identify security clues such as

a lock image at the bottom of your browser, or a URL that begins

with https://. These signs indicate that only you and the

merchant can view your payment information.

Never send payment information via email. Information that

travels over the Internet (such as email) is not fully protected

from being read by outside parties. Most reputed merchant sites

use encryption technologies that will protect your private data

from being accessed by others as you conduct an online

transaction.

Please keep a record of your transactions. Just as you save

store receipts, you should keep records of your online

RIVALRY AMONG THE INDUSTRY

Rivalry among the industry is very high. There are so many private, public

and foreign banks operating in the industry. They are fighting for same

customers. Due to government liberalization and globalization policy,

banking sector became open for everybody. So, newer and newer private &

foreign firms are opening their branches in India. This has intensified the

competition. The numbers of factors that have contributed to the increase

rivalry are as follows:

1. A large no. of Banks providing credit card facility:

There are so many banks and non-financial institutions fighting for same-

pie, which has intensified competition.

2. High market growth rate:

India is seen as one of the biggest market place and growth rate in Indian

credit card industry is also very high. This has ignited the competition.

3. Low switching cost:

Customer switching cost is very low. They can easily switch from one credit

card to another credit card and very little loyalty exists.

4. In differentiate services:

Almost every credit card provides similar services. No differentiation exists.

Every bank tries to copy each other’s services and technology, which

increases the level of competition.

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5. High Fixed cost

6. High exit barrier:

High exit barriers humiliate banks and credit card providers to earn profit

and retain customers by providing world-class services.

7. Low government regulations:

There are low regulation exist to start a new business due LPG policy

adopted by India. So, sector is open for everybody.

BARGAINING POWER OF SUPPLIERS

Suppliers of credit cards are credit card companies along the banks. In

credit card industry suppliers have low bargaining powers. Following are

the reasons for low bargaining power of suppliers.

1. Nature of suppliers

Suppliers are the credit card companies like MasterCard, Visa, Amex etc.

they have tie ups with various banks from whom they get ready clientele. In

such situations suppliers hold less bargaining power compared to clients.

2. Few alternatives

Suppliers i.e. Credit Card companies and banks have no alternatives than

to tie up with each other. Both have their own reasons. Credit Card

companies are looking for ready clientele and banks want to provide

financial services to their clients.

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3. RBI Rules and Regulations

Banks’ credit policies are subject to RBI rules and regulations. Banks have

to behave in the way that RBI wants. So, RBI takes all decisions relating to

interest rates, transaction charges etc. This reduces suppliers bargaining

power.

4. Suppliers are not concentrated

Banking industry’s suppliers are not concentrated. There are numerous

suppliers with negligible portion to offer. So, this reduces their bargaining

power. If they were concentrated then they can bargain with banks or can

collectively invest in other no-risky projects.

BARGAINING POWER OF CUSTOMERS

Customers of the banks and credit card companies are those who are in

need of credit, loans, advances and use services of banks. Customers

have high bargaining power. Following are the reasons for high bargaining

power of customers.

1. Large No. of alternatives

Customers have very large no. of alternatives. There are so many banks,

which fight for same pie. There are foreign banks, private banks. These all

increase preferences for customers.

2. Low switching cost

Cost of switching from one card to another card is low. Banks have entered

into fierce competition by providing variety of cards with lots extra facilities.

They are free to select any bank’s service. Switching costs are becoming

91 | P a g e

lower with internet banking gaining momentum and as a result consumers’

loyalties are harder to retain.

3. Undifferentiated Service

Banks provide merely similar services. There is no much difference in

services provided by different banks. So, bargaining power of customer

increases. They cannot be charged for differentiation.

4. Full information about the market

Customers have full information about the market globalization and

digitization consumers have become advanced and sophisticated. They are

aware with each market conditions. So, banks have to be more competitive

and customer friendly to serve them.

THREAT OF NEW ENTRANT

Barriers to an entry in banking industry no longer exist. So, lots of private

and foreign bank are entering in the market. Competitors can come from

any industry to “Disintermediate” banks. Product differentiation is very

difficult for banks and exit is difficult. So, every bank strives to survive in

highly competitive market. So, we see intense competition and mergers

and acquisitions.

Government policies are very favourable to customers and day by day it is

becoming hard for credit card companies to satisfy needs of customers.

There are less statutory requirements needed to start a new venture. Every

bank tries to achieve economies of scale through use of technology and

selecting and training man power.

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THREAT OF SUBSTITUTES

Competition from the non banking financial sector is increasing rapidly.

Sony & software giants such as Microsoft are attempting to replace the

banks as intermediaries. The threat of substitute products is very high.

These new products include credit union and investment houses. One

feature of using an investment house is that the fees that the investment

house charges are tax deductible, whereas a bank it is considered personal

expenses, which are not tax deductible. The rate of return with using

investment houses is greater than a bank. There are other substitutes as

well for banks like mutual fund, Stocks (shares), Government securities,

debentures, gold, real estate etc. So, there is a high threat for substitute.

Conclusion

Indian credit card sector is one of the highly competitive sectors where high

growth rate and high degree of competition exist. Low entry barriers and

high exit barriers ignites competition in this industry. Every bank and credit

card industry strives to survive in the shadow of these barriers. There are

so many substitutes available with customers and they have high

bargaining power whereas suppliers i.e. credit card companies have low

power in their hands.

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10. ANALYSIS AND INTERPRETATION OF DATA

Do you use credit card?

Yes

No

The chart drawn above states that out of 150 respondents in the Panvel

city, 100 respondents are using credit card and the rest 50 do not use

credit card. In percentage, around 66.67 % of respondents are using credit

card and 33.33 % don’t use it.

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Sex:

Male

Female

The chart shows that more than 2/3rd of the respondents were male. The

major reason for this could be that male have regular source of income. 76

% or 76 respondents were male compared to just 24% of the female

respondents or 24 respondents. This Many of the housewives who uses

the credit card are those which are been issued as free card along with

existing card.

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Occupation:

Self Employed

Business

Private Sector

Professional

Govt. Sector

From the sample surveyed, 37% of the respondents were from the private

sector, 21% were professionals, and 14% each from govt.sector, business

and self employed. It shows people working in the private sector are the

major target audience of the credit card companies.

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Which type of credit card do you use?

Visa

MasterCard

Classic

Gold & Diners

Platinum

The pie chart drawn above suggests that MasterCard leads the competition

in the Panvel city. 38% of the respondents use the MasterCard. It is

followed by visa which is being used by 30% of the respondents. The two

are followed by classic, gold & diners and platinum respectively.

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Which is the issuing bank of credit card?

SBI

HDFC

ICICI

HSBC

Others

Majority i.e. 28% of the respondents have credit card facility from the

HDFC. There is stiff competition between SBI and ICICI for the second

position, where SBI has slight edge over ICICI. SBI is being used by 22%

of the respondents whereas ICICI is being used by 21% of the

respondents. HSBC is being used by 16% of the respondents and the rest

13% percent used credit card from various other banks such as PNB, ABN

AMRO, BOB, Axis Bank, Kotak Mahindra Bank, Bank of Rajasthan,

Citibank etc.

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Since how long you have been using the credit card?

< 2 years

2 – 4 years

4- 6 years

Above 6 years

Above pie chart suggests that 59% of the respondents has been using the

credit card for more than 4 years but less than 6 years. 26% of the

respondents fall in the category of 2 – 4 years, 13% percent of them have

been using the card for more than 6 years. Only 2% of the respondents are

such who have used credit card for less than 2 years.

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How much satisfied you are with your existing credit card?

Highly satisfied

Satisfied

Neutral

Dissatisfied

Highly dissatisfied

Majority of the respondents had not much to comment on how satisfied

they are. It can be seen from the pie chart above. 43% of the respondents

are neither satisfied nor dissatisfied with the card that they are using i.e.

they are neutral. 36% of the respondents says that are satisfied with their

credit card facility. Only 11% says they are highly satisfied and 9% says

that they are dissatisfied with the facility that they have. 1% of the

respondents are highly dissatisfied with the credit card facility.

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What is your monthly income?

< 20,000

20,000 – 40,000

40,000 – 60,000

Above 60,000

From the above table it clear that income of respondents.4% respondents

were below 20,000, 24% of respondents were 20,000 – 40,000, 52% of

respondents were 40,000 – 60,000, and 20% of respondents getting above

60,000.

So majority of the respondents were getting income of 20000 – 30000 per

month.

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(%)

Income of the Respondents

4

24

52

20

0

10

20

30

40

50

60

Below 20000 20000 - 40000 40000 - 60000 Above 60000

Salary

Below 20000

20000 - 40000

40000 - 60000

Above 60000

What percentage of income do you save monthly?

< 10%

10% - 20%

20% - 30%

Above 30%

Saving level of the respondents has turn out to be largely in the range of

20% - 30%. 63% of the respondents claims that they save 20% - 30% of

their monthly income. 24% of them saves between 10% - 20% and 13% of

them saves above 30% of their monthly income. None of them saves less

than 10%.

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What are the major purposes for which you use credit card?

Shopping

Hotels

Health

Petrol Pump

Travel and others

The main use of credit card if for refueling vehicles and for shopping. 32%

of the card usage is at petrol pumps and for shopping. For hotels and

restaurants bill payments the card usage is 15%, for travelling and others

its 11% and for health related payments card usage is merely 10%.

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Has credit card brought any changes in your monthly credit?

Yes

No

This table is drawn to show the change in buying behaviour of a credit card holder which is associated with sex. Respondents were asked to tick either “Yes” or “No” to show if credit cards have brought a change in their buying pattern and the data collected was tabulated. About 30% of them feel that credit cards have changed their buying behaviour significantly. They go for instant purchases or meet sudden cash shortage with the help of cards. Comparatively, 84% of females feel that there is a change in their buying behaviour.

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From where did you have the information about the credit card?

Print Media

Sales Person

Friends

Internet

Television

The above pie-chart shows that majority of credit card holders received information from sales person which is 28%. By seeing the chart Sales person stands first in giving information. Many card holders received information from print media which stands second has 22% card holders.

TEST OF HYPOTHESIS

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ISSUING BANK AND THE SEX OF THE CARD HOLDER

The above table shows the relationship between the credit card issued by

different bank such as SBI, HDFC, ICICI, HSBC and Others and the sex of

the card holders.

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GENDER

FEMALE MALE

SBI 5 17HDFC 8 20ICICI 3 18HSBC 3 13OTHERS 5 8TOTAL 24 76

Null Hypothesis: There is no significant association between the issuing

bank and the sex of the cardholder.

More than 75 % of the cardholders are male because they stable source of

income. Most of the females, who are housewives, use the additional cards

which are issued at concessional fee for family members. 71% of the

cardholders use SBI, HDFC and ICICI.

Conclusion: The Null hypothesis is accepted as the calculated value =

3.159 and the table value is 9.488.

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ISSUING BANK AND AGE OF CARD HOLDER

AGE

< 18 YEARS

18 - 25 YEARS

25 - 40 YEARS

40 - 60 YEARS

ABOVE 60 YEARS

SBI 0 3 9 7 3

HDFC 0 0 15 9 4

ICICI 0 1 10 8 2

HSBC 0 3 7 5 1

OTHERS

0 2 2 9 0

The table and the graph have been drawn to show if the issuing bank

varies among the card holders of different age group. It is clear from the

table that nearly 52% cardholders belong to the age group of 18 – 40

years. This category consists of students who are using add on cards or

youngsters who are yet to settle in life; these people have a greater need

for credit cards. On the other hand, the number of cardholders in the age

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group of above 40 years is low comparatively. These people are settled in

life, they have the propensity to save more than spend.

Null Hypothesis: There is no significant association between the issuing

bank and age of the cardholder.

Calculated Value = 15.243, Table Value = 21.026

Conclusion: Since the calculated value of chi-square is less than the table

value, the hypothesis that the credit card chosen by the cardholder does

not depend on the age is accepted.

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ISSUING BANK AND OCCUPATION OF CARD HOLDER

OCCUPATION

SELF EMPLOYE

DBUSINE

SSPRIVATE SECTOR

PROFESSIONAL

GOVT. SECTOR

CC_BANK SBI 4 1 9 4 4

HDFC 3 2 15 4 4

ICICI 1 5 4 9 2

HSBC 6 1 4 3 2

OTHERS

0 5 5 1 2

From the table it can be seen that more than 50 % of the cardholders

belong to the salaried class i.e. the private and government sector

employees, as they have a limited source of income whereas the other

49% cardholders belong to the self employed and professional group. The

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credit card helps the cardholders to meet sudden expenses in case of non-

availability of cash.

Null Hypothesis: There is no relationship between the issuing bank and

the occupation of the card holder.

Conclusion: Calculated Value = 31.779 Table Value = 26.296. Therefore

the null hypothesis that there is no relation between issuing bank and the

occupation of the cardholder is rejected.

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ISSUING BANK AND INCOME OF CARD HOLDER

INCOME

< RS. 20000

RS. 20000 - RS. 40000

RS. 40000 - RS. 60000

ABOVE 60000

CC_BANK SBI 0 1 7 14

HDFC 0 0 6 22

ICICI 0 4 6 11

HSBC 0 3 5 8

OTHERS 0 0 3 10

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The above table and chart has been drawn to determine the relationship

between the different banks issuing credit cards and the monthly income of

the card holders. Most of the people who have taken credit cards are those

whose income is greater than Rs. 20000 pm. Those with higher income are

more willing to avail the type of services offered by banks. Also banks take

all precautions in selecting the cardholders; they generally do not issue

cards to a person unless they are satisfied about the credit worthiness of

the applicants.

Null Hypothesis: There is no association between the issuing bank and

the monthly income of the card holders.

Calculated Value = 11.987, Table = 15.507

Conclusion: The Chi-square value is less than the table value. The

Hypothesis that there is no association between the credit card selected

and monthly income of the card holder is true.

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ISSUING

BANK AND

SAVINGS OF

CARD

HOLDER

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SAVINGS

< 10%10% - 20%

20% - 30%

ABOVE 30%

CC_BANK SBI 0 3 13 6

HDFC 0 9 18 1

ICICI 0 4 16 1

HSBC 0 6 9 1

OTHERS

0 2 7 4

The table shows the relationship between bank issuing credit cards and

savings of the cardholders. Savings is shown as a percentage of the

monthly income. Approximately, the tendency of the people to save is in

between 20% - 30% of their monthly income. Credit cards not only help the

cardholders to acquire purchasing power, but also help in rotation of funds.

Null Hypothesis: The issuing bank and monthly savings of the cardholder

are independent of each other.

Calculated Value: 14.696, Table Value = 15.507

Conclusion: The calculated value of chi-square is less than the table

value, hence it can be inferred that the basis on which the cardholders

selects the issuing bank doesn’t depend on their monthly income.

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CHANGE IN BUYING BEHAVIOUR AND SEX OF CARD HOLDER

This table is drawn to show if the change in buying behaviour of a credit

card holder is associated with sex. Respondents were asked to tick either

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GENDER

FEMALE MALE

YES 11 19NO 13 57

“Yes” or “No” to show if credit cards have brought a change in their buying

pattern and the data collected was tabulated. About 30% of them feel that

credit cards have changed their buying behaviour significantly. They go for

instant purchases or meet sudden cash shortage with the help of cards.

Comparatively, 84% of females feel that there is a change in their buying

behaviour.

Null Hypothesis: The change in buying behaviour is not related to the sex

of the card holder.

Calculated Value = 3.770, Table Value = 3.841

Conclusion: Since the calculated value is less than the table value, the

hypothesis that changes in buying behaviour are not related to the sex of

the card holder is accepted.

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CREDIT LIMIT ON CREDIT CARD AND INCOME OF CARD HOLDER

The above table and graph would help us draw an inference about the

relationship between the average monthly credit limit using credit cards and

the monthly income. The figure says that those with income level above Rs.

20000 pm have been availed credit limit above Rs. 25000 to large extent.

Therefore the distribution for this would be skewed, in the sense that those

who have higher income would have higher credit limit.

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INCOME

CREDIT LIMIT RS. 20000 - RS. 40000

RS. 40000 - RS. 60000

ABOVE 60000

< 25000 1 1 125000 - 50000 1 6 150000 - 100000 6 18 20ABOVE 100000 2 2 41

Null Hypothesis: The monthly credit limit of the cardholder is not related to

the monthly income. Calculated value = 33.609, Table Value = 12.592

Conclusion: The Calculated value is greater than the table value which

means that the hypothesis that monthly credit limit of the cardholder is not

related to the monthly income is rejected.

PURPOSE OF CREDIT CARD AND AGE OF CARD HOLDER

AGE

18 - 25 YEARS

25 - 40 YEARS

40 - 60 YEARS

ABOVE 60 YEARS

SHOPPINGHOTELSHEALTHPETROL PUMPTRAVEL & OTHERS

3 11 10 2

1 8 7 3

1 1 1 1

3 22 18 3

2 1 1 1

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The table and the graph above determines the relationship between

purpose for which the credit card is used and the age of the card holder.

The early nester-first time user, 18 – 45 years of age, just married, new to

his career, has greater need for consumer finance to buy durables, clothes

etc. The cardholders above 40 years are more prudent and cautious when

they purchase as they dont want to get in heavy debts.

Null Hypothesis: The purpose of credit card usage does not depend upon

the age of the card holder.

Calculated Value: 10.966, Table Value = 21.026

Conclusion: The value of chi-sqaure is less than the table value, the

hypothesis that there is no association between the age of the cardholders

and the purpose for which cards are used holds good.

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PURPOSE OF CREDIT CARD AND INCOME OF CARD HOLDER

INCOME

RS. 20000 - RS. 40000

RS. 40000 - RS. 60000

ABOVE 60000

SHOPPINGHOTELSHEALTHPETROL PUMPTRAVEL & OTHERS

1 9 16

3 8 8

0 2 2

5 6 35

1 2 2

The above table determines the relationship between the purpose for which

the credit card is used and the income of the cardholders. If a person wants

to make purchase, he needs money; otherwise he has to postpone the

purchase. But credit cards help him to purchase whatever he wants and

pay later.

Null Hypothesis: The purpose for which the credit card is used is

independent of the card holders’ income.

Calculated value = 12.239, Table Value = 15.507

Conclusion: The value of chi-square is less than the table value, hence

the hypothesis is accepted.

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MEMBERSHIP DURATION AND OCCUPATION OF THE CARD

HOLDERS

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OCCUPATION

SELF EMPLOY

EDBUSINE

SSPRIVATE SECTOR

PROFESSIONAL

GOVT. SECT

OR

< 2 YEARS 2 0 0 0 0

2 - 4 YEARS

5 1 14 3 3

4 - 6 YEARS

7 10 22 12 8

ABOVE 6 YEARS

0 3 1 6 3

The above table shows the relationship between the duration of the

membership and the occupation of the cardholder. Nearly 60% of them

have been using the credit card for the period greater than 4 years and less

than 6 years.

Null Hypothesis: There is no significant difference between membership

duration and occupation Value: 28.739, Table Value: 21.026

Conclusion: The calculated value is greater than the table value hence the

null hypothesis is rejected. This means that there is significant relation

between membership duration and the occupation of the cardholders.

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CORRELATION ANALYSIS

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GENDER * SPD_LIMIT Cross tabulationCount

SPD_LIMIT

Total GENDER < 25000

25000 - 50000

50000 – 100000

ABOVE 100000

FEMALE 2 5 7 10 24

MALE 1 3 37 35 76Total 3 8 44 45 100

From the above we can infer that 76% of the respondents are male

which more than 2/3 rd of the sample size. 42% of the females have

credit limit above 1,00,000 whereas 46% of the males have credit

limit above 1,00,000. This is obvious as males have stable source

of income and again all the females using credit card are not

working women. Many housewives uses credit card which are

issued at concessional fees along with card hold by the male.

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Overall figures reveal that majority of the cardholders have the

credit above 50,000.

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INCOME * SPD_LIMIT Cross tabulationCount

SPD_LIMIT

Total< 2500025000 - 50000

50000 - 100000

ABOVE 100000

INCOME RS. 20000 - RS. 40000

1 1 6 2 10

RS. 40000 - RS. 60000

1 6 18 2 27

ABOVE 60000 1 1 20 41 63Total 3 8 44 45 100

The above table and graph clearly shows that there is direct

correlation between the income of the card holder and the credit

limit allowed to the card holder. As the income of the card holder

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increases the credit limit on the card also increases. This is

obvious as bank cannot grand higher credit limit to those who

doesn’t have repayment capacity and doing so increases the

chances of default. From the figures can derive that more than

90% of the credit card holders have credit limit above 50,000 and

almost 90% of them have income above 40,000 per month.

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OCCUPATION * SPD_LIMIT Cross tabulationCount

SPD_LIMIT

Total< 2500025000 - 50000

50000 - 100000

ABOVE 100000

OCCUPATION SELF EMPLOYED

1 0 9 4 14

BUSINESS 0 2 4 8 14

PRIVATE SECTOR

1 4 22 10 37

PROFESSIONAL

0 0 5 16 21

GOVT. SECTOR

1 2 4 7 14

Total 3 8 44 45 100

130 | P a g e

The figure gives clear indication that more than 50% of the

cardholders are salaried class people and this category is

scattered over all the categories of credit limit i.e. depending on

the salary of the person, the credit is granted. Whereas on the

other hand, the figures of the professionals and business class

people show that they have credit limit above 50,000. This is so

because banks generally issues credit cards to those

professionals and business people who are well established.

131 | P a g e

AGE * SPD_LIMIT Cross tabulationCount

SPD_LIMIT

Total< 2500025000 - 50000

50000 - 100000

ABOVE 100000

AGE 18 - 25 YEARS

2 2 4 2 10

25 - 40 YEARS

0 3 24 16 43

40 - 60 YEARS

1 2 9 25 37

ABOVE 60 YEARS

0 1 7 2 10

Total 3 8 44 45 100

132 | P a g e

The picture which emerges from the above chart is that age group

of 25 – 40 years mostly have credit limit of 50,000 to 1,00,000

whereas age group of 40 -60 years have credit limit of above

1,00,000. The major reason for this can be the age group of 25 –

40 years is still not yet settle or not as well settled as age group of

40 -60 years. Hence banks are more liberal on granting credit limit

to age group of 40 – 60 years than to 25 – 40 years of age group.

133 | P a g e

AGE * SAVINGS Cross tabulationCount

SAVINGS

Total10% - 20%

20% - 30%

ABOVE 30%

AGE 18 - 25 YEARS

4 6 0 10

25 - 40 YEARS

13 30 0 43

40 - 60 YEARS

2 24 11 37

ABOVE 60 YEARS

5 3 2 10

Total 24 63 13 100

134 | P a g e

The above table shows the relationship between the age group

and the percentage savings of the respondents. The trend is very

clear. More than 63% of the respondents are saving between 20 -

30 % of their monthly income. Another trend which can be

observed is that people in the age group of 40 – 60 years saves

more than other age groups. This is again obvious as the burden

on their shoulder is more than any other. None of the respondents

in the age group of 18 – 40 years of age are able to save more

than 30%. The reason again might be that they may not be well

settled and need to spend extra bit on the necessities. Also this

group spends more freely than other age groups.

135 | P a g e

11. FINDINGS AND RECOMMENDATIONS

Findings of the Study

The following are the major findings with regard to the study on the usage

pattern of the credit card holders.

1. Most of the respondents are male cardholders, because they are

employed and have a good source of income. (76%)

2. Most of the respondents are in the age group 25 – 40 years. The

tendency and need to purchase is more at this age. (43%)

136 | P a g e

3. Majority of the cardholders belong to the salaried class of the

Government and Private Sector, when their salary is exhausted at the

end of the month, the credit card helps them to overcome a

temporary cash crisis. (51%)

4. Respondents with higher salary utilize the cards to the maximum

whereas those with lower salary are more cautious.

5. Lower the savings, higher is the requirement for the use of cards.

Purchases can be made through cards and can be paid from next

month’s salary because the limit is 45 days for settling the dues.

6. Male respondents feel that there is a definite change in their

consumption behavior. Credit cards can be used for both personal

and business purpose. There is no need for postponement of

purchases due to cash shortage.

7. Credit cardholders with higher income feel that credit cards have

changed their consumption pattern. The credit card purchase is not

always a rational buy; some part of it is also impulse buying.

8. Consumers are catching on the convenience of plastic. The number

of card holders has increased in the recent as it is evident from the

rise in the number of members in two years.

137 | P a g e

9. Salesmen of the banks are the main source of awareness to the

cardholders.

10. Master and visa cards are two of the leading card brands in

India. One of the main reasons for MasterCard’s dominance is its

advertising which is appropriately ‘Indianized’.

11. HDFC bank cards are more popular and widely accepted. On

the main reasons for HDFC dominance is its advertising. The bank

has done really good job by attracting the number of customers

through personal contacts and advertisements. HDFC provide a lot of

additional benefits like phone banking, bonus points and internet

banking etc to meet the needs of the different class of people.

12. In recent years, the number of member establishments

accepting credit cards has increased which induces the customer to

avail the credit facility and increase their purchasing power.

It is seen from the finding of the study that credit cards are mostly used

by cardholders for purchase. Hence credit cards help the conscious

consumers of the largest group of salary class to enhance their

purchasing power.

138 | P a g e

SUGGESTIONS

With the multiplying volumes and the contest for efficiency, marketers

should focus on aftersale services for the existing and potential card

holders to maintain them as their customer. A shakeout is inevitable in

this field of marketing. The card issuers face many difficulties and the

credit card service market also suffers from certain bottle necks which

can be outlined below.

1. The banks must reduce the service charge which is to be paid by

the card holders for ticket booking, petrol fills and certain

establishments that charge 2 to 3% on the total price.

2. Women should be induced to use credit cards by creating

awareness on the benefits derived from them. New schemes

should be introduced to cater to their specific needs.

3. The methods should be adopted to bring degree of popularization

through mass media channels like Television, Radio, Airports

Centres, Star Hotels, Railway Centres, and Super Markets etc.

4. Customer education is needed for increased awareness, facility

derived and ways to make the best use of the card.

5. The credit card holder should sincerely and honestly repay the

balances in time and facilitate the system to work out smoothly.

139 | P a g e

6. The credit cardholders should plan their economic affairs i.e. they

should not buy unnecessary or unwanted things simply because

they have credits which does not require immediate payment.

They should always think about the future commitments and

arrange funds for in time.

7. The Admission fees and renewal fees should be reduced so that it

can attract more customers.

8. The interest charged by the credit card agencies is much higher

than the normal lending rates by the bankers and it should be

reduced.

9. Credit card companies have to be loyal towards credit card

holders. They shouldn’t cut unnecessary amount or charges from

the account of credit card holders.

10. The only way banks are going to survive in the credit card

business is by improving their overall functioning and

infrastructural systems. This especially true of some nationalized

banks that delay billings due to a lack of adequate informational

systems and trained persons.

140 | P a g e

12. CONCLUSION

The liberalization of the economy, boost to exports and the

increased business travelling and credit in India favour the credit

card industry. The present environment needs to be matched by

increased awareness about credit cards among retailers and

should be full proof for preventing misuse. Credit cards are

catching up with the middle class despite its late entry in the

Indian market. They are no longer a status symbol as it is only a

mode of convenience and integral part of the busy life style of the

people, matching with the pace of development. Credit cards all

set to make a definite impact on the buying behaviour of people. In

present days, the credit card is mostly used by urban people but it

is not easily available to rural people. Hence, all commercial banks

should take necessary steps to provide credit cards to rural

people. It leads to increasing the personal income, business

development of bank as well as economic development.

From the analysis of the individual questions we can come to the

conclusion that most preferred bank by the credit card holders is

HDFC bank followed by ICICI bank and SBI. MasterCard is the

widely preferred card of all companies. Majority of the respondents

approached were using credit card for the period of 4 – 6 years.

Almost 80% of the respondents are in the range of neutral to

satisfied level with their credit card service. Credit cards are widely

used by respondents for mainly two purposes viz. Fuel and

shopping. Savings as percentage of monthly income is largely in

the 20% to 30%.

141 | P a g e

From the analysis of the individual questions we can come to the

conclusion that most preferred bank by the credit card holders is

HDFC bank followed by ICICI bank. MasterCard is the widely

preferred card company. Majority of the respondents approached

were using credit card for the period of 4 – 6 years. Almost 80% of

the respondents are in the range of neutral to satisfied level with

their credit card service. Credit cards are widely used by

respondents for mainly two purposes viz. Fuel and shopping.

Saving as percentage of monthly income is largely in the range of

20.

142 | P a g e

13. REFERENCE SECTION

13.1 Questionnaire

Note:

We, the students of N. R. Institute of Business Management, have

undertaken the project to study the usage pattern of credit card holders of

Panvel city.

The details provided in this questionnaire would be kept confidential and

would be used purely for the academic purpose.

Do you use credit card?

Yes

No

Sex:

Male

Female

Age:

< 18 years

18 – 25 years

25 – 40 years

40 – 60 years

Above 60 years

143 | P a g e

Occupation:

Self Employed

Business

Private Sector

Professional

Govt. Sector

1. Which credit card do you use?

Visa

MasterCard

Amex

OTHERS

2. Which type of credit card do you use?

Silver

Gold

Platinum

Others

144 | P a g e

3. Which is the issuing bank of credit card?

SBI

HDFC

ICICI

HSBC

Others Specify: _____________________

4. Since how long you have been using the credit card?

< 2 years

2 – 4 years

4- 6 years

Above 6 years

5. How much satisfied you are with your existing credit card?

Highly satisfied

Satisfied

Neutral

Dissatisfied

Highly dissatisfied

145 | P a g e

6. From where did you have the information about the credit card?

Print Media

Sales Person

Friends

Internet

Television

7. What is your monthly income?

< 20,000

20,000 – 40,000

40,000 – 60,000

Above 60,000

8. What percentage of income do you save monthly?

< 10%

10% - 20%

20% - 30%

Above 30%

146 | P a g e

9. What is the spending limit of your credit card?

< 25000

25000 – 50,000

50,000 – 1,00,000

Above 1,00,000

10. Has credit card brought any changes in your monthly

spending?

Yes

No

11. What are the major purposes for which you use credit card?

Shopping

Hotels

Health

Petrol Pump

Travel and others

147 | P a g e

13.2 Bibliography

Books:

Banking and financial system – by N.D Kapoor

Research methodology – by Uma Sekaran (John Wiley & Sons, INP)

Banking System in India – Vasant Desai

Websites

www.google.co.in

www.RupeeTalk.in

www.creditbhai.com

www.answers.com

www.hsbc.co. in

www. ic ic ibank.com

www.cybercel lmumbai .com/cyber-cr imes/ credi t -card- f raud

www.hdfc.com

www.sbi.com

148 | P a g e

13.3 Hypothesis Output from SPSS Software

Custom Tables

Output Created 04-Feb-2011 10:56:30

Comments

Input Data C:\Users\Ankit\Desktop\FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=CC_BANK GENDER

DISPLAY=LABEL

/TABLE CC_BANK [COUNT F40.0] BY GENDER

/CATEGORIES VARIABLES=CC_BANK GENDER

ORDER=A KEY=VALUE EMPTY=INCLUDE

/SIGTEST TYPE=CHISQUARE ALPHA=0.05

INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.016

Elapsed Time 0:00:00.012

GENDER

FEMALE MALE

Count Count

CC_BANK SBI 5 17

HDFC 8 20

ICICI 3 18

HSBC 3 13

OTHERS 5 8

149 | P a g e

Pearson Chi-Square Tests

GENDER

CC_BANK Chi-square 3.159

df 4

Sig. .532a

Results are based on nonempty rows and columns in each innermost sub table.

Notes

Output Created 04-Feb-2011 11:00:19

Comments

Input Data C:\Users\Ankit\Desktop\FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=CC_BANK OCCUPATION

DISPLAY=LABEL

/TABLE CC_BANK [C][COUNT F40.0] BY

OCCUPATION [C]

/CATEGORIES VARIABLES=CC_BANK

ORDER=A KEY=VALUE EMPTY=INCLUDE

/CATEGORIES VARIABLES=OCCUPATION

ORDER=A KEY=VALUE EMPTY=INCLUDE

TOTAL=YES POSITION=AFTER

/SIGTEST TYPE=CHISQUARE ALPHA=0.05

INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.000

Elapsed Time 0:00:00.018

150 | P a g e

OCCUPATION

SELF EMPLOYED BUSINESS PRIVATE SECTOR PROFESSIONAL

GOVT.

SECTOR Total

Count Count Count Count Count Count

CC_BAN

K

SBI 4 1 9 4 4 22

HDFC 3 2 15 4 4 28

ICICI 1 5 4 9 2 21

HSBC 6 1 4 3 2 16

OTHER

S

0 5 5 1 2 13

Pearson Chi-Square Tests

OCCUPATION

CC_BANK Chi-square 31.779

df 16

Sig. .011*,a

Results are based on nonempty rows and columns

in each innermost sub table.

*. The Chi-square statistic is significant at the 0.05

level.

151 | P a g e

152 | P a g e

Notes

Output Created 20-Mar-2010 22:01:54

Comments

Input Data C:\Users\Ankit\Desktop\

FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=CC_BANK

INCOME DISPLAY=LABEL

/TABLE CC_BANK [C][COUNT F40.0] BY

INCOME

/CATEGORIES VARIABLES=CC_BANK

ORDER=A KEY=VALUE EMPTY=INCLUDE

/CATEGORIES VARIABLES=INCOME

ORDER=A KEY=VALUE EMPTY=INCLUDE

TOTAL=YES POSITION=AFTER

/SIGTEST TYPE=CHISQUARE

ALPHA=0.05 INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.031

Elapsed Time 0:00:00.024

INCOME

< RS. 20000

RS. 20000 - RS.

40000

RS. 40000 - RS.

60000 ABOVE 60000 Total

Count Count Count Count Count

CC_BANK SBI 0 2 7 13 22

HDFC 0 0 6 22 28

ICICI 0 5 6 10 21

HSBC 0 3 5 8 16

OTHERS 0 0 3 10 13

Pearson Chi-Square Tests

INCOME

CC_BANK Chi-square 12.808

df 8

Sig. .119a

Results are based on nonempty rows and

columns in each innermost sub table.

153 | P a g e

SAVINGS

< 10% 10% - 20% 20% - 30% ABOVE 30% Total

Count Count Count Count Count

CC_BANK SBI 0 3 13 6 22

HDFC 0 9 18 1 28

ICICI 0 4 16 1 21

HSBC 0 6 9 1 16

OTHERS 0 2 7 4 13

Pearson Chi-Square Tests

SAVINGS

CC_BANK Chi-square 14.696

df 8

Sig. .065a

Results are based on nonempty rows and

columns in each innermost sub table.

154 | P a g e

Notes

Output Created 04-Feb-2011 11:03:02

Comments

Input Data C:\Users\Ankit\Desktop\

FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=CC_BANK

SAVINGS DISPLAY=LABEL

/TABLE CC_BANK [C][COUNT F40.0] BY

SAVINGS

/CATEGORIES VARIABLES=CC_BANK

ORDER=A KEY=VALUE EMPTY=INCLUDE

/CATEGORIES VARIABLES=SAVINGS

ORDER=A KEY=VALUE EMPTY=INCLUDE

TOTAL=YES POSITION=AFTER

/SIGTEST TYPE=CHISQUARE

ALPHA=0.05 INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.016

Elapsed Time 0:00:00.019

Notes

Output Created 04-Feb-2011 11:04:24

Comments

Input Data C:\Users\Ankit\Desktop\FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=CHANGE GENDER

DISPLAY=LABEL

/TABLE CHANGE [COUNT F40.0] BY GENDER

/CATEGORIES VARIABLES=CHANGE

ORDER=A KEY=VALUE EMPTY=INCLUDE

/CATEGORIES VARIABLES=GENDER

ORDER=A KEY=VALUE EMPTY=INCLUDE

TOTAL=YES POSITION=AFTER

/SIGTEST TYPE=CHISQUARE ALPHA=0.05

INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.016

Elapsed Time 0:00:00.015

155 | P a g e

GENDER

FEMALE MALE Total

Count Count Count

CHANGE YES 11 19 30

NO 13 57 70

Pearson Chi-Square Tests

GENDER

CHANGE Chi-square 3.770

df 1

Sig. .052

Results are based on nonempty rows and

columns in each innermost sub table.

156 | P a g e

Notes

Output Created 04-Feb-2011 11:06:04

Comments

Input Data C:\Users\Ankit\Desktop\

FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=SPD_LIMIT

INCOME DISPLAY=LABEL

/TABLE SPD_LIMIT [COUNT F40.0] BY

INCOME

/CATEGORIES VARIABLES=SPD_LIMIT

ORDER=A KEY=VALUE EMPTY=INCLUDE

/CATEGORIES VARIABLES=INCOME

ORDER=A KEY=VALUE EMPTY=INCLUDE

TOTAL=YES POSITION=AFTER

/SIGTEST TYPE=CHISQUARE

ALPHA=0.05 INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.016

Elapsed Time 0:00:00.027

INCOME

< RS. 20000

RS. 20000 - RS.

40000

RS. 40000 - RS.

60000 ABOVE 60000 Total

Count Count Count Count Count

SPD_LIMIT < 25000 0 1 1 1 3

25000 - 50000 0 1 6 1 8

50000 - 100000 0 6 18 20 44

ABOVE 100000 0 2 2 41 45

157 | P a g e

158 | P a g e

Pearson Chi-Square Tests

INCOME

SPD_LIMIT Chi-square 33.609

df 6

Sig. .000*,alb

Results are based on nonempty rows and columns in

each innermost sub table.

*. The Chi-square statistic is significant at the 0.05 level.

Notes

Output Created 04-Feb-2011 11:10:26

Comments

Input Data C:\Users\Ankit\Desktop\FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=PURPOSE1 AGE

DISPLAY=LABEL

/TABLE PURPOSE1 [COUNT F40.0] BY AGE

/CATEGORIES VARIABLES=PURPOSE1 ORDER=A

KEY=VALUE EMPTY=INCLUDE

/CATEGORIES VARIABLES=AGE ORDER=A

KEY=VALUE EMPTY=INCLUDE TOTAL=YES

POSITION=AFTER

/SIGTEST TYPE=CHISQUARE ALPHA=0.05

INCLUDEMRSETS=YES CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.031

Elapsed Time 0:00:00.036

159 | P a g e

18 - 25 YEARS 25 - 40 YEARS 40 - 60 YEARS ABOVE 60 YEARS Total

Count Count Count Count Count

PURPOS

E1

SHOPPING 3 11 10 2 26

HOTELS 1 8 7 3 19

HEALTH 1 1 1 1 4

PETROL PUMP 3 22 18 3 46

TRAVEL &

OTHERS

2 1 1 1 5

AGE

Pearson Chi-Square Tests

AGE

PURPOSE1 Chi-square 10.966

df 12

Sig. .532a,b

Results are based on nonempty rows and

columns in each innermost sub table.

160 | P a g e

Notes

Output Created 04-Feb-2011 11:12:04

Comments

Input Data C:\Users\Ankit\Desktop\

FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=PURPOSE1

INCOME DISPLAY=LABEL

/TABLE PURPOSE1 [COUNT F40.0] BY

INCOME

/CATEGORIES VARIABLES=PURPOSE1

ORDER=A KEY=VALUE EMPTY=INCLUDE

/CATEGORIES VARIABLES=INCOME

ORDER=A KEY=VALUE EMPTY=INCLUDE

TOTAL=YES POSITION=AFTER

/SIGTEST TYPE=CHISQUARE

ALPHA=0.05 INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

Resources Processor Time 0:00:00.031

Elapsed Time 0:00:00.031

[DataSet1] C:\Users\Ankit\Desktop\FINALPROJECT.sav

161 | P a g e

Table 1

INCOME

RS. 20000 - RS.

40000

RS. 40000 - RS.

60000 ABOVE 60000 Total

Count Count Count Count

PURPOSE1 SHOPPING 1 9 16 26

HOTELS 3 8 8 19

HEALTH 0 2 2 4

PETROL PUMP 5 6 35 46

TRAVEL & OTHERS 1 2 2 5

Pearson Chi-Square Tests

INCOME

PURPOSE1 Chi-square 12.239

df 8

Sig. .141a,b

Results are based on nonempty rows and

columns in each innermost sub table.

162 | P a g e

Notes

Output Created 04-Feb-2011 11:13:39

Comments

Input Data C:\Users\Ankit\Desktop\

FINALPROJECT.sav

Active Dataset DataSet1

Filter <none>

Weight <none>

Split File <none>

N of Rows in Working Data File 100

Syntax CTABLES

/VLABELS VARIABLES=CC_DURA

OCCUPATION DISPLAY=LABEL

/TABLE CC_DURA [COUNT F40.0] BY

OCCUPATION

/CATEGORIES VARIABLES=CC_DURA

ORDER=A KEY=VALUE EMPTY=INCLUDE

/CATEGORIES

VARIABLES=OCCUPATION ORDER=A

KEY=VALUE EMPTY=INCLUDE

TOTAL=YES POSITION=AFTER

/SIGTEST TYPE=CHISQUARE

ALPHA=0.05 INCLUDEMRSETS=YES

CATEGORIES=ALLVISIBLE.

163 | P a g e

Resources Processor Time 0:00:00.016

Elapsed Time 0:00:00.017

OCCUPATION

SELF EMPLOYED BUSINESS

PRIVATE

SECTOR PROFESSIONAL

GOVT.

SECTOR Total

Count Count Count Count Count Count

CC_DU

RA

< 2 YEARS 2 0 0 0 0 2

2 - 4 YEARS 5 1 14 3 3 26

4 - 6 YEARS 7 10 22 12 8 59

ABOVE 6

YEARS

0 3 1 6 3 13

164 | P a g e