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On June 16, 2008,
Standard Chartered Bank1 (Standard Chartered) and Citibank2, two leading foreign
banks in India, came up with two new products in the domestic credit card
industry to woo Indian customers, giving a boost to their Indian retail
operations. In collaboration with the Tata AIG General Insurance Company Ltd3,
Standard Chartered came up with a product, ‘Plus Extended Protection Plan'. The
Plus Extended Protection Plan provided risk cover for lost cards.4
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The bank's
general manager, credit cards and personal loans, R.L.Prasad, said, "We receive
several reports of lost cards in a month. The product will ensure
protection to our valued customers against any fraudulent use."5
With this product, Standard Chartered, hoped to
obtain a wider reach to people who were reluctant to apply for credit
cards due to the risks associated with them. It thus hoped to carve a
niche for itself in the still nascent credit card segment in India and
also compete with other aggressive market players like ICICI Bank.6
On the same day, Citibank also launched its latest product, the Citigold
Global Banking, a premium banking and wealth management service
exclusive to Citigold's affluent clientele segment, which provided a
range of both retail banking and wealth management products and
solutions including investments, insurance, mortgage, business banking,
retirement planning, succession planning, and wealth transfer.7
According to Sanjay Nayar, CEO-India & Area Head for Bangladesh, Nepal
and Sri Lanka, Citibank, "Lots of credits are required for the growing
economy today and hence we will have to see how far we are able to reach unpenetrated
markets."8
Banking sector reforms were an integral part of the financial sector
liberalization which was ushered in following the economic reforms
initiated in India in 1991. Allowing foreign banks to expand their
branch networks more freely was an important policy instrument to
achieve the objective of creating a more competitive environment.
This was because, with a larger role for the private sector and the
market forces, it was widely believed that only competition could push
the system to greater efficiency.9
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1] Standard Chartered Bank India is the country's largest international bank, with 82 branches and over 8,000 employees. The bank has played a significant role in the history of the banking industry in India since its first branch was opened at Kolkata in 1858. (www.ibef.org)
2] Citibank is a major international bank, the consumer and corporate banking arm of the financial services giant Citigroup, one of the largest companies in the world. (www.en.wikipedia.org)
3] Tata AIG General Insurance Company Ltd (Tata AIG General) is a joint venture company, formed by the Tata Group and American International Group, Inc. (AIG). It is one of the leading players in the Indian insurance industry.
4] "Unique Risk Cover for Lost Credit Card," www.telegraphindia.com, June 17, 2008.
5] "Foreign Banks Target Newer Business Segments,"www.financialexpress.com, June 17, 2008.
6] ICICI Bank is the leading private sector bank and the second largest bank in India. It dominated the credit cards segment of the industry.
7] "Foreign Banks Target Newer Business Segments," www.financialexpress.com, June 17, 2008.
8] "Foreign Banks a Threat to PSBs, say Govt Bankers," www.ficci.com, September 15, 2007.
9] Montek S. Ahluwalia, "Financial Sector Reforms in India: An Assessment," www.planningcommission.nic.in, (Retrieved on June 18, 2008). |
