Bombay, Feb. 19, Rueter, India has discovered the joy of credit cards but seems wedded to the inevitability of bundles of bank notes.

Together with owning a zippy Japanese Style car, having a credit card at the hip is the latest symbol of New go getting India.

“This industry is about to explode”, said Diners Club India Managing Director Shamsundar Aggarwal.

Plastic money is nothing new to India Diners Club issued its first card here in 1961. But lately, the country’s stodgy state owned banks have discovered the cards can be used as marketing tools to increase their deposits.

Payments through plastic is increasingly accepted at hotels shops and restaurants across India, to the relief of Indian businessmen who otherwise have to carry fat wads of rupees for their travel costs.

There are still only 150,000 cardholders out of 750 million Indians.

Still, industry leaders see a bright future for credit cards as India’s economy develop sand wealth spreads.

It’s a big change in a country where millions of people rarely even handle cash, banks sometimes take months to clear cheques and branches have been known to refuse to cash their own bank’s traveller’s cheques.

Some 70,000 of the card holders belong to diners club, considered by some to issue the country’s most prestigious bit of plastic. A diner’s sticker on the rear window of one’s Maruti Suzuki car is a totem of the Delhi or Bombay “Yuppie”.

Diners Club, owned by Citibank and franchised worldwide, only began its current growth in India adding an average of 1,300 new accounts a month a few years ago.

Diners require an annual income of at least 60,000 rupees (4,600 dollars) about 18 times: the national per capita income. Eyen the more plebian bank cards want a year income of 36.000 rupees (2,800 dollars).

Indian Diners Club members generate up to 70,000 charges a month worth 200 million rupees (55 million dollars) in billings in 1987, up from 600 million rupees (46 million dollars) in 1986. Aggarwal says he nets around one per cent of that.

About 7,000 establishments accept the card 90 percent of them in Bombay, New Delhi, Calcutta, Bangalore, Hyderabad, and Madras. “The number will increase because there’s going to be a demand, a need for it”, he said.

Diners club has to be careful about who gets its blue and white plastic. There are no credit rating bureaus in India and suing debtors in courts often takes years.

“We write off 0.81 per cent a year and I am to keep it under one percent,” Aggarwal said.

At least two other state owned banks plan to issue cards shortly and some of the smaller banks are tying up with the larger ones, such as Andhra, or Central. This holds the MasterCard franchise.

Industry sources said American Express, which has thus far spurned locally issued cards because of the India/Nepal only restriction is taking another look at the Indian market.

The cards can be pricey with interest rates on some unpaid balances of two per cent a month.


Still young Indian go getters often think it tacky to pay a dinner bill with a few tattered 100 rupee notes, especially when other diners are flashing their plastic.

Article extracted from this publication >> February 26, 1988