Banks seek clarity on common credit limit

Banks have submitted a draft to the Indian Banks' Association (IBA) seeking clarification from the Reserve Bank of India (RBI) on the proposal of common credit limit. Each bank has its own credit limit which it does not want to disclose to other banks, said Pralay Mandal, credit card head, HDFC Bank, Tuesday.

"We have asked a clarification from the RBI on the mechanism to disclose such information," Mandal said adding that the draft will be submitted shortly by the IBA to the RBI.

The central bank on June 28, issued draft guidelines on credit card operations and had asked feedback from banks on the proposal of setting up a common credit limit for all credit card issuers.

"We have agreed to most of the norms," Mandal said.

Currently, Credit Information Bureau of India is the nodal agency which contains all the data related to credit card issuances by its member banks.

"If the new system of common credit limit is set up, then CIBIL or a similar agency can be used as a platform from where retail and corporate borrowers can avail information," said Master Card country head Nitin Gupta.

Gupta and Mandal were speaking to reporters after jointly launching the Titanium Credit Card.

CIBIL could be an ideal platform for such information dissemination after banks have a common credit limit, said Mandal.

"It is important to have a credit bureau such as the CIBIL and we have nothing against such a common credit limit," Mandal said.

Currently, banks take into account factors like income, demography, educational background, credit behaviour on other products while issuing credit limits to customers.