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| ICICI to block all cards in case of default on one |
| BS Reporter / Mumbai Sep 29, 2009, 00:13 IST |
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Citi, StanChart already follow this practice, SBI Cards differs.
Adopting a practice that many considered standard in the credit card industry, ICICI Bank will block all its credit cards issued to a customer in case s/he defaults on any one of them.
The bank, which is the country’s largest private sector lender with the largest credit card base, has already informed its customers about the move which will come into effect from October 5.
According to the new terms and conditions, if a customer holds two or more cards and defaults on payment in one of the card accounts, “ICICI Bank is authorised to block the credit limit as made available to the card member under all other ICICI Bank’s card accounts as well as withdraw such privileges/ benefits as made available under all such card accounts, till such time the defaulting card account is regularised by the card member.”
“The card member also agrees and acknowledges that ICICI Bank shall not be required to provide any additional notice for the above,” as per the revised terms. This attempt is the latest by the bank to reduce losses on its credit card portfolio. The bank has already brought down its credit card base to 6 million from a peak of about 9 million.
However, players such as Standard Chartered Bank and Citibank have been following this practice for a long time. “This is the standard operating procedure for us. If a customer defaults on one line of credit, it is obvious that the lender will try to mitigate the risk on other lines of credit,” a senior executive from Standard Chartered Bank said. “This is a justified move on our part and a lot of players already follow this policy,” said a senior ICICI Bank executive.
Asked why his bank had not adopted this strategy earlier, he said, “We have been dealing with our delinquencies in different ways. We wanted to make our policy clear to customers, which is why we informed them.” SBI Cards, which has the third-largest credit card base in the country, does not follow this policy, according to a senior executive.
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