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Probe sheds light on credit card capers

April 25: A government probe has come across what many credit card holders have suspected — and suffered — all along.

Some banks delay delivering bills and encashing cheques, mislead subscribers, play around with language as well as the size of the fine print and run their grievance cells mechanically, according to the probe report.

The inquiry, conducted by the investigative arm of anti-monopoly watchdog MRTPC, has recommended action against HSBC and Citibank for violating the RBI’s guidelines.

The director-general of investigation and registration of the MRTPC has said both banks were allegedly delaying delivery of bills and realisation of cheques to charge more interest rate and late fee.

The two banks today said they are unaware of the contents of the report.

Delayed bills and subsequent skirmishes have created such bad blood that some banks have started SMSing and emailing payment alerts.

An official dealing in cards said banks would have to waive the penalties if it can be proved that the bills were late. However, he conceded that often, the customer’s tenacity is tested by transferring calls from one executive to another.

In its preliminary report, the MRTPC wing said the banks’ direct sales agents, who work for a commission, were soliciting customers without disclosing their independent status. An impression was created that the promises made are “as good as made by an officer of the bank”.

The probe found fault with the language used in the “most important terms and condition” (MITC) document supplied by the banks. The document did not convey in full the interest-free grace period.

Citibank did not mention the address of either its registered office or corporate address, making it difficult for a consumer to issue notice of termination for credit cards, the report said.

HSBC’s terms were in the smallest font, which could be hardly read with bare eyes. The RBI has specifically stated that “the font size of MITC should be minimum Arial-12”. The probe report did not mention the size of the HSBC font.

At call centres of the banks, phones were operated mechanically and no expert was available to respond to customers’ grievances. The report termed it a “deceptive method amounting to unfair trade practice” as banks are required to explain the billing process to customers.

Citibank said: “We wish to state that Citibank conducts its business in accordance and in compliance with all applicable laws and regulation.”

Based on the preliminary report, the MRTPC can issue notices to the banks. If the reply is not satisfactory, it can ask the RBI to take action.

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