Models of Conduct

By Ramesh Akkineni

From an article in Business Standard

Persons without independent income cannot hold a credit card, says RBI.

B-School students may have to surrender their credit cards if the Reserve Bank of India goes ahead with its draft guidelines on credit card operations. The guidelines have recommended that credit cards should not be issued to persons, including students, with no independent financial means.

It is an independent card. However, in some cases, this has been issued as an add-on card. Now, the banks may have to suspend the operation of these cards.

According to an ICICI executive, cards are issued to IIM students as they are seen as capable of getting well-paying jobs. He points out that this segment has a lot of potential — cards issued to students now represent only around 0.01 per cent — of the total card portfolio.

“Banks are in the business to take risk and if a bank has good risk management systems in place it should not be a problem with the regulator,” says an executive in a public sector bank.

The regulator has also recommended setting up of a credit limit for an individual credit card holder irrespective of the number of cards one holds.

Senior bankers fear that it will be difficult to gather information on an individual customer’s total credit exposure as many may not be willing to divulge the credit limit sanctioned to him by his banks.

Good conduct comes from good policies. It also increases chances of others following it as an example. The above guidelines are good policies and give rise to good conduct. They promote the general well being of the country.

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