Credit card limits of nearly 200,000 customers of Axis Bank has been reduced by 30-90% with effect from April 15.
New Delhi: Private sector lenders such as Axis Bank and Kotak Mahindra Bank have reduced credit card limit of their customers between 30-90% in order to reduce repayment risk, making it difficult for customers, living on credit due to salary cut or job loss.
According to a report in the Economic Times, credit card limits of nearly 200,000 customers of Axis Bank has been reduced with effect from April 15.
“Credit limit on my Axis Bank Vistara card was slashed to just Rs 50,000 from Rs 5,00,000 despite paying dues on time. When I inquired with their customer care, I was told that it was a technical glitch that would be rectified in a few days,” an Axis Bank customer from Mumbai told the publication on the condition of anonymity. Another customer who also didn’t wish to be identified said his limit was slashed to Rs 1.5 lakh from Rs 7 lakh.
According to Axis Bank’s quarterly report in December 2019, the private sector lender had a 12.6% market share while it had 10.7% share in the total credit card spending.
Another private sector lender Kotak Mahindra Bank has also slashed credit card limits of its customers. “My credit limit has been revised to Rs 44,000 from Rs 75,000…the reason given is regular account review process,” a Kotak card customer told the publication.
When contacted, a Kotak Mahindra Bank official told the business daily that this is a routine exercise.
“Analysing credit worthiness and card spend behaviour of credit card holders is our regular ongoing exercise and is not unique to the current period,” the business daily quoted Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank as saying. “Based on credit card spends and repayment data, we analyse credit limits of customers, and offer to increase a customer’s credit card limit or reduce the credit limit in certain cases,” he added.
“The correction in the credit card limit is a self-correcting process for banks. Since credit limit is entirely at the bank’s discretion, it is the most obvious tool to lower business risk,” said Ajay Srinivasan, director, Crisil Research.
According to RBI data, outstanding amount on credit card reached an all-time high of Rs 1.1 lakh crore at the end of February, up nearly 26% over last year. There were more than 56 million credit card customers in India at the end of January 2020. Credit card loans accounted for 1.2% of total bank credit in the first 11 months of FY20 compared with 0.5% in FY15.
