Today, its is seen that every other person uses credit card for their daily usage eg: shopping for grocery, for petrol or for things which he knows he would be able to pay by next month . This comes in very handy when you can divide you expenses month wise. You know that you can always pay the minimum on your credit card bill and pay the rest by next month , the only problem is you will have to pay interest on your reducing balance eg HDFC charges 3.25% per month and 39 %  annually. So, you can imagine how expensive it is when you try to divide your o/s credit card bill.

People may still be OK with the credit card charges when they have to bare it for only 2 or 3 months.

But, have you ever wondered what would happen if you default on few payments? How much impact can this have on your future or you may ask does it even have any impact? You can imagine similar situation, when you borrow money from your friend and family and forget to repay, they tend to loose faith in you and will not give you a single penny until you can prove you have improved or someone who can assure others you will be able to pay their money.

In the above example, we have used friends and family but who is the big brother who watches in the banking world? Who keeps a tab on our credit history? If you ask a common man he would say the respective bank keeps a track. or he may simply say “don’t know”.

The Big Brother or the big boss who watches all our credit history and repayment history is none other than Credit Information Bureau (India) Limited, also known as CIBIL. It is a repository of information that contains history of all the borrowers as it generates credit report of all borrowers. The report keeps a tab of our repayment history, settlement , defaults, contact details and the important point over here is that this information is shared between all banks. So, if you forget to pay and if the trend continues then be very sure you are in trouble, big time.

Anyone who borrows money from the bank gets automatically listed under CIBIL and all the defaulters gets punished in a very badly. They are blacklisted for next 7 years. When I heard it for the first time, I said, “Are they nuts?”. But, what can you do, rules are rules. It seems a bit unfair that you have to wait 7 years before you can borrow money from any bank. This may affect your dreams when you want to buy a house or car or go for your vacation.

One may ask , can I clear my name under CIBIL? Yes, but the fresh loan that you may get may not be at the current market rate but much higher. To get fresh loan the person must follow the steps below:

1) Clear old dues.

2) Create a fresh history through fully secured debts.

3) Inform the bank to rectify the status.

4)To get faster resolution send a mail to CIBIL with the credit report.

The database gets update every 45-60 days that way the person will get a fresh loan but at a very costly price.

One must always try to pay of their credit dues on time to avoid complications or the mistake may prove every painful.

Is the person who has overextended credit a candidate for sympathy if he means well? He wants to pay back the outstanding amounts against his multiple credit cards, but what if he has just been fired from his job and cannot make his multiple credit card payments? Do you castigate him, telling him that he made the bed, he must lie in it? If that is so, does your lack of sympathy extend beyond the fact that recovery agents came to his house when he wasn’t at home and threatened his wife and child?

If you are the sympathetic kind (especially if you also have been in a similar jam) would you:

1. Tell the man that recovery agents are not allowed use force on borrowers or speak indecently to him or his family?
2. Tell the man that if he doesn’t want to speak to the recovery agent, the agent has to respect his wishes and withdraw?
3. Point out to him the RBI stipulation that “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees, and friends, making threatening and anonymous calls or making false and misleading representations.“?
4. Point him to the Banking Ombudsman site www.bankingombudsman.rbi.org.in where he can lodge a complaint?
5. Point out to him that his best option would be pay off the entire amount. And then give him tips on how to do it - apply for a loan against property, stocks, insurance policy, or jewelry? But that he should try his best not to go for a settlement?
6. That there are credit counseling agencies, such as ICICI bank’s Disha, that exist for the very purpose of helping people like him?
7. All of the above
8. None of the above

Here are some credit counseling agencies:

• Abhay (Bank of India), 61 A, Sadanand, 1st Floor, Above Bank of India Branch, Gokhale Road (north), Dadar (West), Mumbai- 4000 028. Call 022-24221843.
• Disha (ICICI Bank), Prince Apartments, Ground Floor, Karani Lane, Ghatkopar (West), Mumbai 4000 028. Call 65971815/86/87. Visit www.dishfc.org
• Union Mitra (Union Bank of India), Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai- 400021. Call 022-22896502.

Answers:
Correct answer - Option 7
Incorrect answer - Any other option or combination of options
So incorrect that it scares me! - Option 8

Capital is defined as assets remaining after deduction of liabilities; the net worth of a business. Before a new business owner can raise capital for their startup or expansion of their existing business, they must first identify the different sources of funding, find one that is most compatible with their needs, and then meet the given criteria of the investor or bank. These crucial steps can mean the difference between having the opportunity to successfully raise capital and leaving their new business ideas behind. Companies having a large capital are in a more favourable situation to take innovative & calculated risks in their endeavors giving them a cutting edge & strong financial standing over their competitors. These ventures are backed with financial projections prepared by the business, business plans & other related research, which highlight the profit projections & other valuable information. Though most companies would like to fund the entire venture by using in-house funding it is not always possible to do so, forcing most companies to approach angel investors, venture capitalists, banks, etc. Credit rating of a company depends on the capital of the company. These lending institutions & bodies also examine the credit rating of the company before sanctioning any financial assistance to the company. On a scale of 0 – 100 companies having a rating of 75 & above are considered as a good credit rating & loan acceptance of such companies are higher than those that have a lower rating.

The business might also use business credit cards for purchase of various assets or other day-to-day necessities. Maintaining such credit cards allow the company not only to control various expenditures but also allow the company to keep a detailed & tracked record of the expenses incurred every month. To apply for such facilities the company should also have a good credit rating apart from the various other conditions imposed by the credit card company. The company requires a variety goods & services from a variety of vendors & suppliers. The payment for such goods & services is always not possible immediately or through various credit cards. The company would like to enjoy a period of credit from its suppliers & vendors. A large capital held by the company would ensure that the suppliers & vendors felt safe while extending a longer & higher credit terms to the company.

Companies having substantial amount of capital always have a better position in the society than other companies as people measure the company’s reputation on basis of its net worth. A company having a better reputation would find it comparatively easier to make new clients & better supply of goods & materials.

Apart from the various factors that affect the credit rating of a business, maintaining a large capital is primarily the most important. It ensures that the business can promote its products & services more aggressively also helping the company expand into new & up coming ventures, with the tremendous profitability with ease. The company’s standing in the society in which it conducts its business activities is also highly improved. A large capital thus is not an option but a necessity for any business organization in the modern era.

“An EMI credit card? Wow! I use the credit card but I pay it off via EMIs. This has to be the best scenario ever!”

* * * *

Two months later: “I was given an ICICI EMI card with the promise that Rs. 2000 will be automatically deducted from my bank account every month. Firstly, this never happened, including no statement. And secondly, I was slapped with a Rs. 600 penalty on a total expense of Rs. 5500 on my credit card. On calling the helpline, the “service officer” told me to pay Rs. 4000 cash; and the Rs. 600 debit would be adjusted. Which means I would have already paid Rs. 6100….”

Aah! What’s the use?

* * * *

People, please! DO NOT take verbal promises from telemarketers as gospel, please, please, please!!!! You have no way of proving anything. The best solution for the above mentioned sad experience would be to settle all outstanding dues immediately so that it doesn’t affect your credit rating. And, anything such as this occurs in the future, make sure to send in a complaint in writing and get an acknowledgement. In addition, enter a complaint on the bank’s website. The point here is to ensure that you do everything as per procedure, especially complaints. This will ensure the bank cannot accuse you of not following procedure as an excuse for not rectifying your issue/complaint.