I was quite disappointed to read media reports about the declining credit card numbers in India due to poor credit history. Usage, however, must not be showing any signs of dip, if you factor for the macro economic turmoil of third quarter of 2008. The dip must be simply on account of banks cancelling multiple credit cards or inactive credit cards and tightening of credit card policies. All banks from early 2000 started doling out credit cards, like sales people hand out pamphlets at railway stations. This was so different from the time when yours truly got his first credit card.
My first credit card was from Central Bank of India, which also used to be the account where our salary got credited. In those days, we used to take a travel advance in cash and settle all bills. Once, I got caught in Aurangabad with a depleting cash balance and a foreign expert to entertain. Lessons of budgeting learnt in the summer of 1992 ensured that never again I ran out of cash. First thing I did after landing back in Bombay (not Mumbai in those days) was to apply for a credit card. I met a person in the branch and he said come after one year. I took me a while to realize that what he meant was come to after the account with the bank completes one year. The day I completed 1 year, I promptly went to the bank filled a form and got myself a credit card.
The credit card was an automatic cash machine. Go out for dinner with friends, pay by card and collect the cash - no need for standing in queues in the bank. The younger generation, fed on ATM cards, has no idea about the pleasures of lounging in a bank, and waiting for the token number to flash. The lady on the teller counter, will count Rs1000 three times before handing over the cash to you and advising you to count in front of her. Spending patterns were still driven by mental calculations of bank balances. One interest entry was enough to ensure all payments were made in the drop box before the due date. I kept the card for a long time till I shifted to Bangalore.
Then the boom period in Indian credit card started when everyone started offering credits cards to all and sundry. Due to this proliferation, not having a credit card became snobbish. The important thing is when you actually want a credit card, no tele-caller calls you. I had a bad experience with one bank and I decided to exercise my rights as a customer by choosing to boycott the bank and its products. The next step was to call the much advertised toll free numbers to apply for one.
Suddenly, I became bad credit for all the tele-callers. Till I called them, all of them wanted to give me Platinum card, add on cards for my wife, my infant son, my aged parents, and when I wanted a card, I was asked my designation, name of company, bank account details and politely told, this is your reference number and our sales person will call you shortly. No one ever called back and after some time, out of sheer frustration, I called one of my friends in a bank to “arrange” for a card and within days, got one. The moment I got the card, the jinx broke and again I became good credit with tele callers ringing in with attractive offers.
In Bangalore, one could use credit cards to buy booze in Food World. This simple gesture by the government to permit retail chains to stock booze in Bangalore did a lot to financial inclusion. Everybody wanted to have a credit card because you could consume now, pay later, and that too in installments. An even more interesting innovation was to swipe a card at an eating joint and show the token to buy your bottle of poison in the liquor store. With such technology-led enablers, it was no wonder that every software person wanted to work in Bangalore.
Just yesterday, my friend narrated the latest and most interesting use of credit card. He was accosted by a friendly neighborhood police man early morning who demanded his share. My friend, Mr X showed his wallet and gave the usual excuse of no cash. No problems, credit card chalega (will do) said the observant police man. Mr X actually thought that the cop will take out a hand held device and swipe the card, and was disappointed by the use of more traditional methods. The cop, sat in his car and requested Mr X to buy him an Arrow shirt. This will make all analysts more optimistic about the aspirations of the Indian consumer. Left with no option, Mr X drove the cop around and luckily for him, shops were shut. Thinking on his feet, Mr X, handed over the card to him and said - Sir ji, I will take you shopping tomorrow, Aaj office jaana hai. Within ten minutes, he called the bank and cancelled his credit card. Maybe this is why, credit card users are coming down in India.
PS - I am eagerly waiting to find out if kanoon ke lambe haath catches up with Mr X.