Indian Banks increasingly are offering defaulters on their credit cards lower-interest loans to pay off their card debts.
On some cards, issuers in India may charge annual interest rates approaching 40%, while the interest on other bank loans being offered to help cardholders pay off their debts may range from 18% to 24%, according to an official from India’s second-largest card issuer ICICI Bank, which issues more than 7 million credit cards in India.
“We cannot publicize it because it would mean a rush of people coming to us for converting their [card] dues to loans,” he says on the condition of anonymity. “We are working with select customers who we think have developed a genuine disability to pay.”
Mumbai-based Bank of Baroda also has adopted this practice for some customers and similarly does not want to publicize it, an official there tells PaymentsSource, also requesting anonymity. “We do not want card users defaulting on regular obligations and going for these easier settlement options,” he says.
