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Old 4th August 2009, 14:07   #1
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Default Grounds for Bank's "periodic reviews"

Hi All,

Many of you must have received an sms from DB confirming a reduction in credit limits. I have not used my card for some time and from 96K, they have reduced the limit to 10K. How do they expect me to use this card? They have left me with a bitter taste in mouth. Here's the copy of my email to them:

In short, I am dis-satisfied with their responses at the customer care:

Dear DB Officer:

I am writing this email to you with reference to the mass messages that you are sending to your customers about reducing their credit limits. My credit card number for your reference is - XXXX XXXX XXXX XXXX. My original credit limit was INR 75,000 which was later on increased to appx. 96,000. Kindly note that, Its been quite some months that I was not using my DB card due to my other personal and official commitments.

Today (04th August, 2009), to my utter shock, I received an SMS from your end stating that my credit limit is reduced to 10,000 INR.

I understand that it is solely at the discretion of the Bank. However, how do you expect you customers to use your card if the credit limit is reduced from appx. 96,000 to 10,000 just because someone has not used your card for the past couple of months? Isn't it similar to humiliating your customer for no fault of his?
Further, I spoke to your customer care officers, and complained to them about the time taken at the IVR. I was told that I need to dial-in using my PIN. I understand and agree to this. However, being on hold for close to 15-20 mins is not justified.

Lastly, I asked your customer care lady what can be done from my end to bring my credit limit to the normal level (by providing salary slips/bank statements) and I was told that you can apply to increase it only after 9 months?

Can you assist a dis-satisfied customer by providing a suitable reason on what grounds are these "periodic reviews" based? Please feel free to contact me and I would be happy to furnish you with any additional information that you would need.
Thanks!


Kindly note that I have a very good credit history with no delayed payments or anything. Still this

Last edited by amtak : 4th August 2009 at 14:11.
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Old 4th August 2009, 14:34   #2
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Amtak

I had a similar issue w.r.t my HSBC card. And following is the mail i recd from them.

************************************************** *****88

The credit card limit is based on spends and repayment pattern of the
card account, which is reviewed every six months. The Bank has
discretion to reduce or cancel the limit provided on a credit card
without prior information. As per our recent review, your credit limit
is reduced from INR XXXXXXX to INR XXXXX.
The credit card service guide sent to you would also provide the
above-mentioned information.
"Notwithstanding anything to the contrary stated elsewhere in these
terms and conditions, HSBC may in its discretion, without notice to you,
cancel the limit granted on your credit card account or credit card /
add-on card(s) without assigning any reason for doing so. In the event
HSBC cancels the limit granted on your credit card account or credit
card / add-on card (s) in terms of this clause, HSBC shall intimate you
on such cancellation."
We regret to restore the limit at this point of time.
Please feel free to write to us if you require further clarification.
We request you to avail of the nomination facility on all your HSBC bank
accounts. For details, please visit Bank Accounts. Open a new account, online | HSBC Bank India or your
nearest HSBC branch.

****************************************

Planning to move to a new account now
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Old 4th August 2009, 14:46   #3
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@ Lambu, isn't it humiliating? I know my score is very good as I had got it in December and have been paying EMI's and other payments in advance to avoid any negative impacts on my CIBIL score.

Even I had a similar issue with my HSBC card. Cancelled it with no resmorse.
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Old 4th August 2009, 14:49   #4
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Well same happened with me and that too when i was using my ICICI card regularly!
The limit from 101000 is reduced to 15000.
I got same kind of reply as stated by @Lambu'

I was angry initially but then i got another cards with good limits and also this is beneficial for us as we wont be relying too much on plastic money much now.
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Old 4th August 2009, 14:54   #5
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I used to work for a large credit card company. I know that the limit can be reduced or card closed, based on your credit report and performance with other banks. For instance, if a person defaults on an icici account and that is reported to CIBIL, hdfc may do a review and reduce the limit on ur hdfc card as well.

Also if u havent been using a certain %age of your credit limit regularly, banks are known to reduce limits.

Thirdly, in times like those we are facing now (read economy), banks are worried that customers may not be able to repay if they spend a lot of money on their credit cards. So precaution, might be a very obvious reason.
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Old 4th August 2009, 15:13   #6
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Quote:
I used to work for a large credit card company. I know that the limit can be reduced or card closed, based on your credit report and performance with other banks. For instance, if a person defaults on an icici account and that is reported to CIBIL, hdfc may do a review and reduce the limit on ur hdfc card as well.
Agreed. But what when there's no default? And you have a healthy CIBIL report?

Quote:
Also if u havent been using a certain %age of your credit limit regularly, banks are known to reduce limits.
Certain percentage certainly shouldn't be 90%

Quote:
Thirdly, in times like those we are facing now (read economy), banks are worried that customers may not be able to repay if they spend a lot of money on their credit cards. So precaution, might be a very obvious reason.
Understand this. However, reduce it to a acceptable limit. Give a suitable reason. One cannot just send an SMS without giving a justified answer.

Quote:
Originally Posted by harry10 View Post
Well same happened with me and that too when i was using my ICICI card regularly!
The limit from 101000 is reduced to 15000.
I got same kind of reply as stated by @Lambu'

I was angry initially but then i got another cards with good limits and also this is beneficial for us as we wont be relying too much on plastic money much now.
Agreed. I am going to do the same as well. However, it doesn't look too good to me. Do they want to promote "Go" visa Debit cards?? I can see a lot of Debit card ads on their website.
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Old 4th August 2009, 15:15   #7
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@amtak: Your sig

2008 - Hero Honda Hunk
2005 - Maruti Suzuki Zen
1984 - Amit S Takalkar

In 1984, u owned a vehicle called Amit S Takalkar? :P
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Old 4th August 2009, 15:20   #8
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Quote:
Originally Posted by phamilyman View Post
@amtak: Your sig

2008 - Hero Honda Hunk
2005 - Maruti Suzuki Zen
1984 - Amit S Takalkar

In 1984, u owned a vehicle called Amit S Takalkar? :P
The driver was born

PS: - This year TBhp forgot my brithday

This is completely OT. We can create a thread called funny signatures!
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Old 4th August 2009, 15:21   #9
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Hi Amit, Harry10, this seems to be more like an age group profiling issue rather than your ability to maintain your credit.

Most of you are indeed on the lower side of 35-40 age group, many of my friends working in banks state that the sub 35 age group is a high risk area in recession and most delinquencies arise in this age group.

On the other hand seniors (40+ and above) who have and use cards among friends have not reported anything of this sort.
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Old 4th August 2009, 15:24   #10
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Quote:
Originally Posted by amtak View Post
Agreed. But what when there's no default? And you have a healthy CIBIL report?

Certain percentage certainly shouldn't be 90%

Understand this. However, reduce it to a acceptable limit. Give a suitable reason. One cannot just send an SMS without giving a justified answer.



Agreed. I am going to do the same as well. However, it doesn't look too good to me. Do they want to promote "Go" visa Debit cards?? I can see a lot of Debit card ads on their website.
Hi Amtak - I wasnt addressing your specific scenario. I was giving a few reasons that I thought would be reason enough for a credit card company to lower your limit. From your replies it looked like, you thought I had a part to play in lowering your limit.

BTW, I quit that job many years ago.

And yes, customers need to be told the specific reason and they need to be notified by mail as well. sadly, it doesn't happen. Sometimes, even if an application is declined, a customer is not notified of the reasons.

And, if the credit card company, finally does claim that it was due to a recent cibil report, you are entitled to get a free copy of the same. you would know what it looks like, if you have had a look at it of late. Bad things, just have a way of popping up into your credit report, even if you have made payments on time. Call it data entry error or callousness...
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Old 4th August 2009, 15:28   #11
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Quote:
Originally Posted by mmmjgm View Post
Most of you are indeed on the lower side of 35-40 age group, many of my friends working in banks state that the sub 35 age group is a high risk area in recession and most delinquencies arise in this age group.
Quite possible. However, I believe if somone has lost his or her job, they would first report it to the bank in order to find a solution to their fincicial vows.
Further, agree with you that in this age group, people are more spend thrief as compared to others. But, The cards are issued based on criteria's like - Company where you work, Salary slip, bank statements. They can request for these again. Time consuming and tedious but can certain help them filter out the possible deliquents.

Lastly, why a review is after 9 months? The customers have no way of approaching a bank before that?
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Old 4th August 2009, 15:39   #12
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Quote:
From your replies it looked like, you thought I had a part to play in lowering your limit. ...
Not at all. I guess you worked for the "world's local bank"


Quote:
Bad things, just have a way of popping up into your credit report, even if you have made payments on time. Call it data entry error or callousness...
True. Good news in today's paper is common people would be able to know their score by this financial year end (as per today's TOI)
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Old 4th August 2009, 15:50   #13
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Not at all. I guess you worked for the "world's local bank"




True. Good news in today's paper is common people would be able to know their score by this financial year end (as per today's TOI)
No I worked with "Imagination at work".

Then I worked with one of the companies which does something very similar to CIBIL, albeit in the USA. People there get a free copy of their credit report, every 12 months from all the 3 major credit reporting agencies there. And since most of the CIBIL format is based on how things worked in USA, I would imagine that what the papers reported will happen, eventually.

That could also mean we may have a regulation to dispute anything on our Cibil report, that isn't true.
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Old 4th August 2009, 16:00   #14
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No I worked with "Imagination at work".
I have a soft light made by them



Quote:
That could also mean we may have a regulation to dispute anything on our Cibil report, that isn't true.
Having a regulation is better than being at the mercy of the banks. Isn't it? When I had rejected one of my "approved" loans in December, I was told that it'll spoil my credit history!
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Old 4th August 2009, 16:02   #15
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Quote:
Originally Posted by amtak View Post
Quite possible. However, I believe if somone has lost his or her job, they would first report it to the bank in order to find a solution to their fincicial vows.
Further, agree with you that in this age group, people are more spend thrief as compared to others. But, The cards are issued based on criteria's like - Company where you work, Salary slip, bank statements. They can request for these again. Time consuming and tedious but can certain help them filter out the possible deliquents.

Lastly, why a review is after 9 months? The customers have no way of approaching a bank before that?
Hi Amit,

There's again the issue of liquidity in the market and with the bank particularly, if the said bank has had a lot of delinquencies it has lost money because the bank has paid the merchant who has sold the card holder goods and service.

Now if more and more money keeps going away and the card member base shrinks, its money getting lesser and lesser from the pool. After all the bank has to honour your available credit limit at the POS.

When banks plan such things, they have millions of customers, they will see a trend and do their own analysis, if they see that males in the age group of 18 to 30 have the maximum delinquencies they will curb credit supply to that age group in these times.

Again such analysis is costly and is done on a very very large scale, they won't have time to analyse each and every case per se.

9 months is what may have been decided as a gap where the situation improves, till then they have curbed credit to almost over 90% to an age group where they have facts which give rise to fears of delinquencies. Again there will be a sr bank manager who will evaluate credit and the bank's exposure, if delinquencies increase, its his job on the line.

Again, this is also sector specific, say for eg a retired businessman with respectable deposits with the issuing bank will not have any credit limit reductions. Airline, IT & BPO sector employees will definitely have a tough time extending credit as compared to a say bank employee, government employee.

It's not what's happened to you, but its a step taken by the bank to limit its exposure to a recessionary period.
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