Page 26 - Banking Finance August 2023

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Statement and Account of the Receipts and Expenditures Congress has already authorized. Even short of default,
of all public money shall be published from time to time. hitting the debt ceiling would hamstring the government's
ability to finance its operations, including providing for the
Raising or suspending the debt ceiling becomes necessary national defence or funding entitlements such as Medicare
when the government needs to borrow money to pay its or Social Security.
debts. For much of the past century, raising the ceiling has
been a relatively routine procedure for Congress. Whenever Potential consequences of reaching the ceiling include a
the Treasury Department could no longer pay the downgrade by credit rating agencies, increased
government's bills, Congress has acted quickly and borrowing costs and a drop off in consumer confidence
sometimes unanimously to increase the limit on what it that could shock the United States' financial market and
could borrow. Since 1960, Congress has increased the ceiling tip its economy and the world's into immediate recession.
seventy-eight times, most recently on June 2023. Since the United States has never defaulted on its
obligations, the scope of the negative repercussions related
In January 2023, the total national debt and the debt ceiling to a default are unknown but would likely have catastrophic
both stood at $31.4 trillion. The U.S. government has run a consequences in the United States and in markets across the
deficit averaging nearly $1 trillion every year since 2001, globe.
meaning it spends that much more money than it receives
in taxes and other revenue. To make up the difference, it On 3rd June 2023 the debt ceiling has been elevated. Thank
has to borrow to continue to finance payments that God! They have not defaulted.

With credit card usage and outstanding rising sharply in the country, the Reserve Bank of India (RBI) has directed card
issuers (banks and non-banks) to provide an option to their eligible customers to choose any one among the multiple
card networks. Major card networks in India include Visa, Mastercard, American Express and RuPay.
This option may be exercised by customers either at the time of issue or at any subsequent time, the RBI said in a draft
circular to banks. “Card issuers should not enter into any arrangement or agreement with card networks that restrain
them from availing the services of other card networks,” the RBI said.
“Card issuers should issue cards across more than one card network,” the central bank said. Card issuers and card
networks should ensure to adhere to these requirements in existing agreements at the time of amendment or renewal
and fresh agreements executed from the date of the RBI circular, it said.
“It is observed that arrangements existing between card networks and card issuers (banks and non-banks) are not
conducive to the availability of choice for customers,” the RBI said. Some banks have been forcefully asking customers
to accept particular card networks.
According to RBI data, credit card outstanding has soared to Rs 2 lakh crore, a rise of 29.7 per cent on a year-on-year
basis. “The surge in credit card usage in India is a positive indicator of the growing purchasing power of our country.
The outstanding debt of over Rs 2 lakh crore underscores the power of credit cards in enabling individuals to fulfil their
needs and wants,” said Meet Semlani, Co-founder, Tartan.
However, it is crucial to establish the right awareness to ensure credit cards are issued with the right practice by credit
card companies, Semlani said.
Vivek Iyer, Partner and leader, Financial services risk, Grant Thornton Bharat, said spending has been high in contact-
intensive sectors such as travel, hospitality, and tourism, where historically credit card has been the preferred mode of
payment, given the large ticket size of payments. “Additionally, non-discretionary spending is also being routed through
credit cards primarily due to the innovative reward structure followed by various Banks. The innovation in reward
structures is driven by a deep understanding of customer preferences, on account of continued investments in customer
analytics across the customer life cycle,” Iyer said. (Source: The Indian Express)

26 | 2023 | AUGUST | BANKING FINANCE