ICICI Bank, India's biggest retail bank, is in the process of closing down its retail sales finance division (consumer loans division). The move was initiated last month.
V. Vaidyanathan, executive director, ICICI Bank said consumer loans through credit cards would be both "cost effective and quicker" for the bank, compared with repayment through post-dated cheques.
ICICI is among the many banks that have tightened disbursements of loans for small-ticket loans especially consumer durables, in the second half of 2007-08.
This closure comes after shutters were drawn on consumer durable financing by GE Money and CitiFinancial, two of the most aggressive firms in the business.
Analysts said some banks, which still have the divisions that give out small loans, are there for namesake only.
Vaidyanathan, who is in charge of retail banking, does not think ICICI will lose out on potential borrowers because they don't own a credit card.
"The credit card is fairly common; there are few people who don't own one these days," he said.
ICICI has a Rs 9,000 crore credit card portfolio with 8 million customers.
Banks such as ICICI have a small part of their total loan exposure to consumer durables.
Only 2-3% of ICICI's loans, for example, are given to buy consumer durables, compared with 50% for home loans, 30% to auto loans and 17% for personal loans.
ICICI, meanwhile, is moving its employees from the consumer loans division to credit cards following the decision to move consumer durable loans to credit cards.
Emails were sent out to relationship managers working for the division, around ten days back, confirms a source from the bank. These employees will now be absorbed in the credit card division, they were told.
With no increments and promotions this year, this has led to a lot of heartburn in the credit card division, as next year the existing employees will have to compete with more people, points out the source.
V. Vaidyanathan, executive director, ICICI Bank said consumer loans through credit cards would be both "cost effective and quicker" for the bank, compared with repayment through post-dated cheques.
ICICI is among the many banks that have tightened disbursements of loans for small-ticket loans especially consumer durables, in the second half of 2007-08.
This closure comes after shutters were drawn on consumer durable financing by GE Money and CitiFinancial, two of the most aggressive firms in the business.
Analysts said some banks, which still have the divisions that give out small loans, are there for namesake only.
Vaidyanathan, who is in charge of retail banking, does not think ICICI will lose out on potential borrowers because they don't own a credit card.
"The credit card is fairly common; there are few people who don't own one these days," he said.
ICICI has a Rs 9,000 crore credit card portfolio with 8 million customers.
Banks such as ICICI have a small part of their total loan exposure to consumer durables.
Only 2-3% of ICICI's loans, for example, are given to buy consumer durables, compared with 50% for home loans, 30% to auto loans and 17% for personal loans.
ICICI, meanwhile, is moving its employees from the consumer loans division to credit cards following the decision to move consumer durable loans to credit cards.
Emails were sent out to relationship managers working for the division, around ten days back, confirms a source from the bank. These employees will now be absorbed in the credit card division, they were told.
With no increments and promotions this year, this has led to a lot of heartburn in the credit card division, as next year the existing employees will have to compete with more people, points out the source.
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