I recently got a mail from IndusInd bank from whom I have a Credit Card. It talks about “Commitment Charges Clause” which seems to be new to me. Anyone experience the same with any other banks ?
- Never seen this elsewhere/before. I only have experience with CC (of different banks), not OD.
- 0.5% of what ? The max CC/OD limit?
This is very strange especially when it is coming from a big scheduled private bank in india
Commitment fee are levied on term loans for corporates. Basically when a large term loan is approved the bank is committed to allow drawdown. What happens is these corporates avail these loans but will not use it. This is ok if the deposits vs lending ratios are comfy for the bank. Sometimes these ratios will be so tight that bank cannot lend to new customer due to these unavailed loan approvals. Because of this banks will seek commitment fees so that only serious corporates who wish to avail the loan will ask for the same. If the corporate do not use then the bank will charge the fee, if used this is waived.
Applying this to cc and od is unheard of and they will get the flak for this. Od is given when there is a cash flow mismatch
If they have limit constrains, at overall segment level they should be lowering the limit. Charging commitment fee is extreme.
Has this email come from their authorised email id or is it fake.
If this is true exit the card and apply for another from another bank. It is not worthwile keeping this card
Need to re evaluate indusbank financials. Are they so tight financially that they are doing this to generate fee income.
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This looks to be an authorized email. Might have to double-check the sanction letter.
Exactly what I am going to be doing, they’re not giving me enough credit limit neither any good benefits.
They did have issues during the pandemic, I had reduced my FD’s from IndusInd and moved to other banks with lower rates considering the risks involved with IndusInd. Only holding <5L on it.
They even increased fd to 6.50 for 5 years ftom 16 feb
I have a feeling when they say CC/OD - It could mean cash credit facility and not Credit Card. Also if the FD is cash secured, there could be an exemption. Can you please write to them and ask for clarification.
Cash Credit is a short term loan approved by banks for businesses, financial institutions and companies to meet their working capital requirements. The borrowing company can take money, even without a credit balance, upto whatever borrowing limit exists.
I think we assumed that CC stands for Credit Card. But for Cash Credit in its truest form, commitment fee is ok.
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