Monday, January 6, 2014

RIGHTS OF CREDIT CARD HOLDERS

Credit cards have become important part of our life. We use credit card for various things like- booking train/ bus tickets, online shopping, electricity/ phone bill payment etc. You may also find people cursing credit card companies for not disclosing the charges, non-redressal of their grievances or of using other unfair practices. Reserve Bank of India (“RBI”) is the authority which operates the operation of credit cards in India. RBI issues various guidelines to the credit card issuer bank/ companies to inter alia uniform credit card operations in India and protection of the rights of the customers. In this Article, I have reproduced the important extract of RBI guidelines, which a credit cardholder must know:


Rejection of Credit Card application

Banks should convey in writing the main reason / reasons of rejection of the credit card application.

Interest and Charges

Banks should publish on their website the interest rate charged and circumstances under which higher interest rate may be charged should be transparent.

Methodology of calculation of finance charges should be indicated with illustrative example.

Annualized percentage rates should be quoted with examples.

Minimum payment disclaimer should be added in the statement.

MITC (Most Important Terms and Conditions) should explain that free credit period is lost if balance is pending.

No additional charge without express consent.

Change of charge (other than interest) can be made only after giving notice of one month.

In June 2012, District Consumer Forum, Mumbai levied fine of Rs.25,000/- on HSBC Bank for recovering inapplicable surcharge from a customer on the basis of vague or misleading information as it amounts to unfair trade practice according to provisions of the Consumer Protection Act, 1986. (Click here to read the entire article.)


Pitfall of paying only minimum payment

Cardholders should understand that if minimum amount has been paid, the interest will be charged on amount after the due date of payment. Thus, RBI instructs card issuers to prominently display in all monthly statements following statements so as to cuation customers about the pitfalls in paying only the minimumamount due:

"Making only the minimum payment every month would result in the repayment stretching over years with consequent interest payment on your outstanding balance"

Insurance

Insurance for liability arising out of lost card should be optional.
In case of insurance cover, bank should obtain details of nominee and should indicate details of insurance company.

Wrongful biling

I guess this is the major reason of dispute between card issuing bank/ NBFC and the cardholder. It is the duty of card issuing bank/ NBFC to ensure that wrong bills are not raised. In case, if a customer protests any bill, the card issuing bank / NBFC should provide explanation along with necessary documentary evidence, if required.

Recovery Agents or any other third party

The card issuing bank / NBFC would be responsible as principal for all acts of amission or commission of their agents (DSAs / DMAs and recovery agents)


Grievance redressal

Grievance redressal machinery should be constituted at Bank and the details of concerned officer should be given on the Bill.

60 days time should be given to customer for raising grievance.

Escalation of unresolved complaint should be given on the website of the bank.

There should be a system of acknowledging customer’s complaint.

Block of lost card should be done immediately and should be followed by FIR within reasonable period.

2 comments:

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