ABN Amro has cut the credit limit for many of its card holders in India by one tenth. It has also raised the slab of minimum amount payable from 5 % of total dues to 7 %. The step by the bank is thought to be a measure to persuade the card holders to surrender their cards as the bank plans closure of its personal loan and credit card segment in India.
The bank has plans to sell its retail banking segment to UK's Hong Kong and Shanghai Banking Corp, or HSBC.
ABN Amro which is owned by UK's Royal Bank of Scotland (RBS) has also decided to put a halt on fresh retail lending and issuance of fresh credit cards and retail loans so as to meet for the losses occurred due to pile up of bad debts. These facts have been confirmed by two people familiar to the issue. One of them, a senior bank executive also said that even during the time of economic slowdown, when all other banks had resorted to credit cuts, ABN Amro had not succumbed to such drastic steps.
Although RBS had taken over the Asian operations of the bank back n 2007, the bank still continues operations in India under its previous name. It has been revealed by sources that HSBC has signed a deal to buy RBS' retail businesses in India, China and Malaysia and is awaiting regulatory approvals in the three countries.
"The bank has brought down my credit limit to Rs 2,500 from Rs 48, 000," said one cardholder. He also added that the bank said it was carrying out the same exercise for all customers.
As a responsible lender, we review card limits and take appropriate action on an ongoing basis to protect our customers and manage risk," an ABN Amro spokeswoman quoted.
A person familiar with the operations of the bank commented the bank has lakh active credit card users as its customers. The bank is said to have opted this strategy to coax the customers to surrender their cards with the bank.