Continuing the discussion from IDFC First Bank Limited:
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As a idfc credit card holder and a credit card fanatic,i dont use my idfc bank card at all ,the rewards have reduced and now there are redemption charges as well starting this month.
I have the card only because itās free and there are offers once in a blue moon.I also donāt understand there current strategy of credit card business of offering lower interest to high cibil users as they really donāt care about interest rates because they always pay on time, to me it feels like a classic example of if it aināt broke why fix it!
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And Iām not sure if this was formally announced before introducing. It is a flat 99+ taxes instead of % of redemption.
I also noticed that, for auto-pay credit bill, the amount deducted is slightly less than the total amount due. I read somewhere that if one doesnāt pay the total due amount, the interest rate starts to apply on outstanding balance from that day. Are they doing any dirty tricks to collect interest on outstanding balance?
Disc:
Investor, credit card and savings account holder.
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All the banks have resorted to INR 99 redemption charges. I have Standard Chartered credit card and same is the case here as well. This amount is applicable for each separate redemption. At least in my case, I avoid multiple redemptions and mostly go for coupons with highest denomination with equivalent INR value.
The reason could be they want the middle pie. The credit card consumers who are prompt repayers but revolve their card balance due to not sufficient funds their credit score is not above 750 but above 600.They get to revolve their balance at lower interest rate say 20 to 36 percent as compared to 48 percent charged by other banks. When Mr vaidyanathan said they are expecting 500 crore profit from credit card business i canāt see any way other than this to do it.
Itās only my guessing i donāt know how they are going to do it. Some times i feel Iām too optimistic about the business and finding excuses to believe management talk. Thatās a red flag i find in myself so take my view with caution.
Disclosure: allocated 15% of portfolio. The largest bet
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It was announced in somewhere around may not sure ,the following month the rewards were reduced as well .
I always use cred to pay my bills .So not sure.
I have sold my position in idfc in june peak when hdfc was around 1300 ,Can anyone explain why would someone choose idfc over hdfc in this volatile market and recession fears?(specially when the bigger abnk trades at a discount.
i am a idfc bank account holder for more then a year ,there services are great but lately i have found it is better to move to bigger banks because the services they provide reason being :-
1)I have found you can save more money with better credit card rewards then get a more 2 to 3 % interest saving .Plus i hardly keep my money in bank due to market volatility giving better returns as in ofss giving a yeild of 7% ,irfc giving a yeild of 6% plus .
2)In this volatile market and recession fears i feel it is safer to park money in bigger banks then small banks.
3)I have talked to multiple HNI clients and for them Idfc is a no go as they invest a lot of money in sip or mutual funds via big banks.
4)if idfc does offer same interest rate as big banks how many of you would park you money in idfc then hdfc,axis or any other bank?
5) Idfc would loan to riskier clients then letās stay Sbi ,Axis or Hdfc as there cost of funds are higher .(which to me is the biggest red flag in times like these.
But not all is wrong with idfc i like them:-
1)They are probably the best bank when it comes to transparency of charges ,and have the least amount of charges as well from debit card to imps there is no charge .
- seamless service with zerodha and Idfc 3in1 account ,which i believe is the best discount broker (IT might change as they have launched there own demat account ).
3)better intrest rates, Amazing customer support.
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IDFC First bank has reduced interest rates from 7% to 4.5% and still their CASA is growing very well. Compare that to Yes bank (6.25% on entire amount not in slabs) and Bandhan bankās (6%) savings interest rate. People do trust IDFC First with their money.
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I am an HNI and IDFC forms the biggest holding in my portfolio, why IDFC is ready for giant leap is because of below reasons :
- Best technology stack in the banking sector - their ML & AI stack is world-class and going to support its growth in a massive way.
- Mr. V Vaidyanathan is an amazing promoter that I have come across in recent times, his values and way of working is excellent and it will reflect on the bankās performance.
- Control over the NPA and fulfilling all the guidelines provided by the bank in 2018.
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Dont know how many investors have created wealth from banking sector, banking is highest leveraged business, loan book is always 15-20 times of equity, 5% bad loans wipe of equity capital, story of RBL, Yes, Ujjivan, All PSU banks, Small finance banks, even Biggies like HDFC, Kotak are unable to generate Roe. Axis, Indusind, big laggards, Only ICICI Bank looks promising that too has compounded 14% in last 16 years. Any economic downturn takes all banks to dust, I have been blown out in yes bank badly, stopped seeing banks as investment candidates from Jan 2020 onwards and still happy with my decision as my capital could have been put to Idle for two years and could have missed out on multibaggar gains made in past 2 years. Never believed in Infra exposure of IDFC first bank. It will be very difficult to generate RoA for IDFC first due to large equity base and agressive practices.
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I have been unhappy with the performance of stock since founding of bank. But one thing i am sure of based on my research (i have discreetly talked to lots of people past colleagues, current colleagues, branch staff etc) that this bank will do absolutely no dirty tricks. This guy is super pure and drives clean banking like crazy. One employee told me bank is taking ethical banking to a āphilosophical levelā not logical level. Hope they can post decent profits.
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Hey Saurabh,
Can you please elaborate how you concluded point 1? Would love to dig deeper.
Thanks.
Invested in IDFC
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I was and am under the impression that the main chunk of income to the card issuing bank is from the commercial establishments who pay a certain pre negotiated trade commission to the bank for each sale (depending on the item) along with service charges(split between bank and card network platform like VISA) for the transaction value. The bigger banks like HDFC are able to get larger trade commissions and offer ācash backsā to promote their subscriber base. They surely wonāt do it from their own pocket.
It is an interesting topic and any input on this from a person having subject knowledge would be helpful in clearing cobwebs and assess cashflows from credit card business.
Ethics play a vital role in any company and specially in banks. A banksās culture and reputation lies in its ethics. Being in the banking industry, I am very glad that this bank is openly positioning ethics as one of its top priority and philosophy.
This is where they get the trust from everyone and in a long run it establishes a strong heritage. Hope this bank will keep holding its core values and does not compromise ever.
Few other point I have noticed as an account holder and user is that itās app is quite good and user friendly. I do have account with 3 other bigger banks and I will confidently position the app of this bank as #1 compared to other 3.
I see in the community, some people complain about the down time of its app. This is something the bank has to improve, though in my usage I have not encountered such cases frequently.
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Found very interesting videos where Anil Singvhi talks about what can one achieve with banking license in two years. When we look back VV has done excellent job.
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Anil Singhvi is the best thing that could have happened to IDFC. Only after he took over as Chairman, things on the reverse merger front really took off. We can expect him and VV to work out a win-win arrangement between the shareholders of both the companies. Someone had recently posted that IDFC has asked the bank if they would need capital and the bank is to come back to IDFC in a few weeks. In the recent interview to ET, VV had in the passing, mentioned that he would need capital. So, one can reasonable expect a substantial portion from the sale of AMC will flow to to IDFC bank.
Disc: Switched to IDFC from the bank once it became clear that the reverse merger will happen.
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SEBI recently cancelled the license of Brickwork ratings and has asked it to shut down. One snippet from this finshots daily report caught my attention. Perhaps something worthwhile to think about, when we are talking ethics in IDFC First.
Now, this could be an old reference or something very trivial, but I was wondering if anyone has more insight into this. With my little google search, I couldnāt find much.
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As far as I know, several ratings given by Brickworks, including the one given to IDFC First, lapsed due to certain Brickworks advisers promising favourable ratings.
If such promises were made and IDFC First continued with receiving the rating - then you can imagine what kind of conversation could have gone down between both entities.
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This is the full investigation by SEBI ā¦
Looks like this is more of Brick works compliance issue rather than its clients ā¦apart from IDFCF there are several other companies mentioned in this report.
And all the investigations are during the period for 2015 to 2018.
I took sometime and read the whole document. There is nothing wrong from all the companies mentioned in the report. It is BWās fault for not communicating and documenting the meetings.
It is very sad that people in this channel just jump the gun and comes to a conclusion on ethics, management and businesses.
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