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Read between the cards

RBI’s recent recommendations are aimed not only at streamlining credit card operations, but also at making the customers more aware of their rights.

Even as credit card usage is going up by the day—27 million credit cards were in circulation till June 2008, up from 24 million till June last year—so are the complaints against them. From the irksome practice of issuing unsolicited cards to a range of unexplained fees charged by banks, the piling list of grievances has forced RBI to take notice. Acting on allegations of lack of transparency and excessive interest rates, the central bank recently conducted a study on credit card operations. Now, it has come out with a set of guidelines, which are not only intended to streamline operations but also empower the customers. While it’s not mandatory for the banks to adopt these recommendations, they will help the customers become more aware of their rights and serve as a basis for redressal of complaints. Here are some plaguing issues that you may now be able to deal with more competently:

1. HAVE YOU RECEIVED AN UNSOLICITED CARD? WHAT IF YOU LOSE IT?

How many times have you been saddled with a credit card that you never wanted and have been forced to chase customer care executives to cancel it? RBI has advised the banks that they can issue a credit card or any other product only with a customer’s “explicit consent”. This means that it cannot be processed on an “implied” understanding. And if such a card is lost and misused, it shall be the bank’s responsibility, not yours. On the other hand, if a bank rejects your application for a credit card, it should provide to you in writing the reason for doing so. You can also look forward to cards with photos, PINs and laminated signatures, as advised by RBI to reduce the risk of stealing or misuse of cards.

2. WHAT ARE YOU PAYING AS INTEREST? WHAT IS FINANCE CHARGE?

If you have always wondered why you are paying a higher rate of interest than your neighbour, now the banks will explain it to you. Whether it’s due to your poor payment and default history or some other reason, you shall know because banks have been advised to publicise through their Website and other means the interest rates charged for various categories of customers. Also, given the extremely high interest rates charged by banks on payment rollover, RBI has suggested that they prescribe a ceiling rate, including processing and other charges.

They shall also have to clearly specify any charges that were hidden earlier and surfaced as a nasty surprise along with the bill. So if you are being issued a card that is free of issuance charges only for the first year, banks will have to specify it. If you have always believed in paying only the minimum dues, leaving the balance for the next month in the hope that it shall also constitute free credit period, you will now be told by the bank that the rollover amount is not interest-free. This will enable you to use your card with greater care.

3. IF THERE IS A DELAY IN RECEIVING THE BILL OR STATEMENT

If you have always fretted about the incessant delays in receiving bills or statements, expect online despatches in future—if you are not getting them already. RBI has told the banks that customers are entitled to at least 15 days’ time to pay the credit card bill before the interest begins to be charged.

In order to deal with the complaints of delayed or lost statements, banks have also been asked to take the customers’ acknowledgement for the bills’ receipt. However, a bill cannot be sent after an indefinite period of, say, two years. A time-frame will have to be specified and adhered to by the banks in order to settle any outstanding claims or rectify any error by the card-holder.

4. DO YOU WANT TO FILE A COMPLAINT? HAVE YOU DEFAULTED?

There are very few customers who have not had to spend hours stuck to a phone to correct a billing fault. If you are one such disgruntled card-holder, RBI promises some respite. It has asked the banks to not only have qualified call centre staff members who can deal with all complaints competently, but also to automatically escalate unresolved complaints from a call centre to higher authorities. It has also suggested that the details of such a mechanism should be put up in a public domain, say, on the banks’ Websites.

On the other hand, if the mistake has been yours and you have defaulted on credit card payments, the banks will now give you sufficient notice period to either settle the dues or to inform you that they are reporting your default status to CIBIL or any other Credit Information Company authorised by RBI. In fact, banks shall ensure that they adhere to a procedure duly approved by their board.

5. IF YOU WANT TO END/BLOCK A CARD, OR TAKE INSURANCE

If you do not wish to continue with your credit card and order its closure, banks will have to honour your request immediately. More significantly, if you’ve lost your card and want to block it, the banks must do it the minute you inform them, and the formalities, if any, including the lodging of an FIR, should follow within a reasonable period of time.

Another customer-friendly recommendation by RBI includes the provision of an insurance cover by banks to take care of the liabilities arising out of lost cards. This means that only those card-holders who are ready to bear the cost of the insurance premium should be provided an appropriate cover with respect to lost cards. Besides the question of blocking or closing a credit card, RBI has issued guidelines on its issuance. An important suggestion is that you will not be obliged to share personal information or card history with any other agency, and the bank cannot make it conditional to issuing a card. It is, however, mandatory to share it with Credit Information Companies/CIBIL.

Also, the direct sales agents or direct marketing agents (DSAs/DMAs) have been asked to provide to customers only the documents or papers that have been authorised by banks. In turn, the banks have been advised to design the modes in such a way that no dispute arises between the customer and bank at a later date. Most of the complaints of misselling are attributed to DSAs/DMAs.

As for the persistent grouse about tele-marketeers, RBI has recommended that banks register all their tele-marketeers with the Department of Telecommunications.