While the Citigroup is claiming that its international 
operations are running smoothly, one must go through the Indian example before believing the same. The scene in India is not at all enticing. Though most banks have raised their minimum annual income criteria for a credit card to Rs.1,20,000 from Rs.80,000 and the know-your-customer (KYC) norms have become more stringent, the total amount under credit cards default stands close to Rs.200 billion, data from Credit Information Bureau of India reveals. Probably such kind of data might have scared the officials at Citigroup. As during March 2008, speculations were rife that Citigroup may sell-off CitiFinancial, a NBFC, which belongs to the group. Once considered to be the most aggressive sub-prime lender in India the NBFC was forced to change its norms and issue only collateral backed loans. On the other hand Citibank has also tightened its norms for issuing credit cards and now-a-days is focussing more on financing consumer durables and two-wheelers through credit cards. In rest of the markets Citigroup is now taking a cautious approach.
However, it’s a fact that the company might have suffered huge losses in its investment banking arm, but substantial measures have been adopted to improve the company’s financial health. “Citigroup’s capital position improved noticeably in the past seven months because the company has issued over $30 billion in regulatory capital”, reveals a report published by Moodys, a leading credit rating agency.
But still one question remains to be answered. Will this huge credit card default lead to another financial crisis or it can still be avoided? If one believes Tim Westrich it can actually be avoided. As per him, “Implement a credit card safety rating system that can give consumers better information about their credit cards and thus help them make better decisions. In addition to a credit card safety rating system government should go further to mandate a higher level of fairness in credit card terms.” Or else, well...umm... get ready.
operations are running smoothly, one must go through the Indian example before believing the same. The scene in India is not at all enticing. Though most banks have raised their minimum annual income criteria for a credit card to Rs.1,20,000 from Rs.80,000 and the know-your-customer (KYC) norms have become more stringent, the total amount under credit cards default stands close to Rs.200 billion, data from Credit Information Bureau of India reveals. Probably such kind of data might have scared the officials at Citigroup. As during March 2008, speculations were rife that Citigroup may sell-off CitiFinancial, a NBFC, which belongs to the group. Once considered to be the most aggressive sub-prime lender in India the NBFC was forced to change its norms and issue only collateral backed loans. On the other hand Citibank has also tightened its norms for issuing credit cards and now-a-days is focussing more on financing consumer durables and two-wheelers through credit cards. In rest of the markets Citigroup is now taking a cautious approach.However, it’s a fact that the company might have suffered huge losses in its investment banking arm, but substantial measures have been adopted to improve the company’s financial health. “Citigroup’s capital position improved noticeably in the past seven months because the company has issued over $30 billion in regulatory capital”, reveals a report published by Moodys, a leading credit rating agency.
But still one question remains to be answered. Will this huge credit card default lead to another financial crisis or it can still be avoided? If one believes Tim Westrich it can actually be avoided. As per him, “Implement a credit card safety rating system that can give consumers better information about their credit cards and thus help them make better decisions. In addition to a credit card safety rating system government should go further to mandate a higher level of fairness in credit card terms.” Or else, well...umm... get ready.
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