In an attempt to mitigate losses on its credit card portfolio, India's largest private sector bank, ICICI has informed its customers that if a person is carrying more than one ICICI credit card, the bank will block all the credit cards in case of default on one. The move will come into effect by 5th October.
According to the terms and conditions, the bank is authorized to block the credit limit made available to the card holder under all other accounts of ICICI and withdraw all facilities under these accounts until the defaulting card account is regularized by the card member.
The revised terms indicate that ICICI bank shall not be required to provide an additional notice for the move.
Foreign players like Citibank and Standard chartered bank have been following this practice for quite some time now. A senior executive from Standard Chartered said "This is the standard operating procedure for us. If a customer defaults on one line of credit, it is obvious that the lender will try to mitigate the risk on other lines of credit."
When asked that why the bank had not embraced this policy before, a senior official said that they had been dealing with the defaults in a different manner and wanted to make their policy transparent to the customers.
The bank has reduced its credit card base from around 9 million to 6 million.
In order to boost customer demand, ICICI slashed Auto loan rates by 50 to 75 basis points, earlier this year. The retail loan portfolio of the bank stood at 96,000-crore (Rs 960 billion) at the end of June 2009, comprising 12 percent of auto loans. The bank is targeting 5 percent growth in its loan book during the current financial year.