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In Singapore, everyone aspires for the 5Cs – Car, condo, Cash, Credit Card & Club membership.  As countries like India grow economically, its natural for more and more people to have similar aspirations.  But what we are seeing as per this article in Bloomberg is the decline in credit card business in India.

Its normal to see people carrying 4-5 credit cards in their wallets in Singapore.  I remember having read some survey long ago that a Singaporean woman carries more credit cards than men.  So much is the spending power of a Singaporean woman that one of the biggest bank in Singapore, UOB issues a credit card exclusively for women. They even have a punchline “The men dont get it“.

The reason cited by this article is the tightening of the unsecured loan portfolios.  Where does it leave the gen Y now? Will this lack of disposable income affect the growth of the Indian economy?  Afterall, the Indian government is banking on this new generation to push the GDP growth to more than 10% annually. Or is cash the new king?

The number of credit cards being used in India has fallen by around one-third or 35% over the last two years. The sharp drop is being attributed to banks’ move to cut unsecured loan portfolios and defaults.

You might have  noticed that those annoying phone calls from banks pushing credit cards have stopped. If you haven’t, you may be surprised to know that one crore credit cards have gone out of circulation over the past two years. There were 2.83 cr credit cards in April 2008. It’s down to 1.83 cr in March 2010.

Banks aggressively selling credit cards have became cautious after suffering defaults. While officials didn’t disclose the extent of their losses, the numbers are clearly quite high.

Another article in Moneylife on the same issue mentions that the credit cards have become unprofitable after having suffered huge losses.

Ever wondered why there are fewer calls from telemarketers offering you a platinum, lifetime free credit card? It has nothing to do with the Do Not Disturb (DND) facility from telecom operators. Credit cards have become unprofitable, especially after various banks suffered huge delinquencies in 2005-07, the boom years. Since the bankers or card issuers are not earning much money on credit cards, you now have to really struggle to get one.

A few years ago or before the 2008 recession, people used to receive a lot of marketing calls for credit cards, free for life from any annual fee. Now the trend seems to have reversed. With the slowdown, many people defaulted on their credit card payments. Usually, during a slowdown, the number of defaults goes up rapidly. However, people don’t default on their home or car loans, since there is a danger of the creditor taking possession of the collateral. However, the same is not true for a credit card. Even if the user defaults on his credit card payment, the recovery takes much more time.

Above picture courtesy: Deems

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It might be too early to make such a declaration, but a lot of pointers indicate that such an unthinkable thing has already started.  Has the Great American Dream that the Indian families so fondly cherished started to grind to a halt? Or is it just a temporary pause?

Remember those days when the H1-B visa quota was reduced from 150,000 to 65,000 and the furore it created during the Bush regime.  Even Bill Gates slammed the US govt for such a myopic decision of not wanting to get in as many people from developing countries such as India into the USA.

A few years ago, when the H1-B visa window opened, it was filled up within a matter of few hours.  This year, the window has been open for 7 weeks already and still 20,000 vacancies still exist.  What happened?

Owing to sluggish US economy, the H-1B visa programme, once the most sought after among Indian professionals, still has nearly 20,000 slots vacant, seven weeks after the American authorities started receiving applications for the fiscal 2010 beginning October this year.

The US Citizenship and Immigration Services (USCIS) yesterday said it has so far received approximately 45,500 H-1B petitions against the Congressionally-mandated cap of 65,000.

This is in contrast to the previous years when USCIS had to resort to computerised draw of lots as it used to receive petitions outnumbering the cap several times within the first few days of opening the scheme.

The USCIS said it has received about 20,000 petitions for the advanced degrees category. However, it would continue to accept advanced degree petitions since experience has shown that not all applications received are approvable, the USCIS said in a statement.

For the fiscal 2010, the USCIS started receiving H-1B petitions from April 1. In the first five working days, it received 42,000 H-1B petitions. In the month and half since then, USCIS has received juts 3,500 more H-1B petitions, indicating the slump in demand for H-1B work visas.

This is mainly attributed to the current economic crisis, high unemployment rate in the US and also partly to anti-H-1B sentiment prevailing in America at present.

Source

Agree that Obama has stopped giving tax breaks to companies that ship jobs outside the US, but then why the reluctance of the Indians to go to the US now?

A recent survey showed that almost 86% of Indian students in the US believe that better days lie ahead for India.  A lot of them favour a return back to India inspite of the salary cut they might have to take.  I know a few friends who have left it all and moved back.  I read the blog of one such person who writes about his experiences in India post his move back from the US.

Have we reached the end of the brain-drain that was so endemic in the 80s and 90s?  Only time will tell.

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Am surprised that the only country in SE Asia that is among the ones given the waiver is Vietnam and not Singapore which is a heavy investor in India. Not to count Australia where thousands of Indian students go to study every year. Hmmm…

Foreign tourists keen on visiting incredible India may no longer have to do umpteen rounds of the local Indian embassy to get their tourist visas. The government is considering a proposal to provide visa on arrivals to tourists coming from 18 countries, which already get five-year multiple entry visas.

These 18 countries include

Argentina
Belgium
Brazil
Chile
Finland
France
Germany
Iceland
Japan
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Spain
South Korea
Switzerland
Vietnam.

Besides this, tourists from the United Kingdom also get a five-year visa while those from the United States of America get a 10-year visa.

Rest of the article here: Financial Express

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