Credit Card Grievances

The Reserve Bank of India (RBI) had issued the notification of Banking Ombudsman Scheme in 2006, after that an aggrieved credit card user can now apply to the concerned Ombudsman for redressal of grievances in addition to a consumer court or a regular court of appropriate jurisdiction.

What are Common Credit Card Grievances?

Some of the most common issues with the Credit Cards pertain to the late statements, harassment by the issuer, incorrect bills and cards issued without intimating the customer. The delayed payments attract an interest penalty of 2.95% of the billed amount but if the customer received the bill late, he/ she is not able to make a timely payment. In many cases, the banks executives call the customer on the pretext of increased the credit limit and try to sell other products. Sometimes, the time made payment also is charged a penalty, due to errors and omissions causing the complaints of the incorrect billing. Further, prior to the stringent action of RBI, the customers were issued credit cards without even asking for it.

Action of RBI: Features of Guidelines

To regulate credit/ATM/debit card businesses RBI constituted a ‘Working Group on Regulatory Mechanism for Cards’ and on the recommendation of this group, notified guidelines for card issuers laying down their duties and obligations. The salient features of the RBI guidelines, which came into effect on November 30, 2005, are as follows:

1. All credit card issuers should provide Most Important Terms and Conditions (MITCs) to customers/prospective customers. MITCs should include information like joining fee, annual membership fee, cash advance fee, service charges for certain transactions, interest free grace period (illustrated with examples), finance charges for revolving credit and cash advances, overdue interest charges and charges in case of default.
2. MITCs should be in Arial-12 points and not in fonts that are difficult to read with the naked eye.
3. Card issuers should quote annualised percentage rate on card products (separately for retail purchase and cash advance).
4. Card issuers should not provide unsolicited cards, loans and any other credit facilities or unilaterally increase credit limits. Card issuing banks/non-banking financial companies (NBFCs) should maintain Do Not Call Registries containing phone numbers of customers and non-customers who have informed them that they do not wish to receive unsolicited calls/SMSes for marketing of credit card products.
5. Card issuing banks/NBFCs would be responsible as the principal for all acts of omission or commission of their agents (direct sales agents/direct marketing agents and recovery agents).
6. Card issuers should follow RBI’s Fair Practice Code for Lenders and Indian Banks Association’s Code for Collection of Dues and Repossession of Security.

Further, the RBI guidelines provide that a customer, who fails to get a satisfactory response from a card issuer within 30 days of lodging of complaint may approach the concerned Banking Ombudsman for redressal of grievances before the expiry of one-year period from the date of receipt of reply from the bank or 13 months from the date of representation to the bank. Currently, there are 15 Banking Ombudsmen located in different state capitals who try to resolve complaints of customers through a process of conciliation or mediation.