In the response of receiving several complaints from the credit card holders against the issuing banks, the Reserve Bank of India- the Master bank- has issued a circular on Thursday directing the banks to adopt more transparency in credit cards operations or be ready to attract penalty. This issued circular was the part of Master Circular issued by apex bank on July in regards of Credit Card operations of Banks.
To protect the credit card customers who have been harassing in the name of several unsolicited charges levied in the name of dues, late fees, processing fee and insurance from the banks, RBI has issued a circular on July 24 stating to publish the upper ceiling of charges by the end of August as the levied charges vary from bank to bank. However, RBI itself has not specified the upper ceiling. Currently banks charge interest rate 30-51%.
The Central Bank has also directed the banks in the circular not to issue the unsolicited credit cards. If it has issued them without the consent of the clients and also send bills, the banks have to face penalty. “The unsolicited credit cards should not be issued and that in case an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank shall not only reverse the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed.” said RBI in the circular.
Besides this RBI has also added, “The person in whose name the card is issued can also approach the Banking Ombudsman who would determine the amount of compensation payable by the bank to the recipient of the unsolicited credit card.”
The RBI has also assigned the ‘whole’ responsibility to the banks when unsolicited credit cards issued have been misused before reaching the person. “Any loss arising out of misuse of such unsolicited cards will be the responsibility of the card issuing bank only and the person in whose name the card has been issued cannot be held responsible.”
For the insurance companies, which generally stick health insurance with the credit cards would now have to ask the beneficiaries in written with proper details of nominee/s for the insurance cover in respect of accidental death and disablement benefits and must also ensure that the relevant nomination details are recorded by the Insurance Company. Moreover, banks would also issue a letter to the credit card holder indicating the details regarding the name, address and telephone number of the Insurance Company, which will handle the claims relating to the insurance cover, directed RBI in the circular.
RBI has also warned the banks, which send credit card statements very late after the due date deliberately to earn extra income in the name of late fee may now face penalty. “Issuer banks now have to receive customers’ acknowledgement for receipt of the monthly credit card statement to ensure there is no delay in dispatching the bills and cardholders have at least a fortnight for making payment before the interest starts getting charged.” RBI stated in the circular.
RBI has also received several complaints, as banks usually do not provide the ‘reason’ of rejecting the application form of credit card and stated, “It is beyond the bank’s rule”. In this response RBI has directed, “In case of a rejection, banks will have to convey the applicant in writing the main reason(s) for turning down the application.”
For protecting the customers and reducing the misuse of the credit card, RBI has advised the banks to issue card with scanned photograph of the customers and signature laminated cards.
The Master bank has also advised the banks not to share the personal data of any customer with any agency without prior acknowledgment of the customer. “It is up to the customer to allow and share the data with agencies or not.” said RBI.
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