Niranjan Bharati & Rajat Guha
NEW DELHI: If you run a start-up or work in a finance company or are on the rolls of an airline or small-time realtor and want a new credit card, Bad times
chances are you may not get one. Banks are summarily rejecting credit card applications from people working in these sectors, as the deteriorating financial health of their industries and the economic downturn makes them less creditworthy.
“Several employees of my company, including me, have had credit card applications rejected. Last month, many credit card requests were turned down by different banks,” said an employee with a major New Delhi-based finance company, requesting anonymity.
The Indian arm of HSBC recently tightened its credit approval mechanism for people working for non-bank finance companies (NBFCs) and real estate companies. “HSBC monitors and reviews the policies governing its lending business and the risk factors that relate to its various products as a matter of routine, regularly,” the bank said in an e-mailed response.
The UK-based bank is not alone. Both state-run and private banks are making their credit criteria more stringent, expanding the so-called `negative list’ of applicant profiles who are denied credit. A large Mumbai-based public sector bank has stopped extending credit to small entrepreneurs, while a private bank has an even stricter scrutiny for applications from employees of airlines and call centre firms.
Until recently, the negative list of banks tended to feature reporters, lawyers, chartered accountants and junior level police and armed forces personnel, but that list is now expanding even though the law prohibits banks from denying credit to anybody based on one’s profession. But for a banking sector keen to protect itself from rising bad debts in a slowing economy and increasing job losses, this law may be difficult to follow.