The Hindu Business Line : Credit card guidelines

This refers to the editorial `Guidelines on the cards' (Business Line, July 7). The proposed RBI guidelines, to banks on credit cards are, indeed, long overdue. Credit card business constitutes an important source of fee-based income for banks. But that is no reason for them to adopt unethical practices.

One such practice is the agent claiming that the interest rate charged by his bank is the lowest. The agent even assures you a free card and explains that the fee charged would be fully refunded, if you make a card purchase for a small amount, within a month of receipt.

You comply, only to discover that in the following month's bill only 50 per cent has been refunded. You are, therefore, forced to make repeated phone calls to the bank's back office before you get the promised refund.

Another practice is the mentioning of both the total and the minimum amount due on every bill, without, of course, stating the consequences of opting for the latter. The reason offered by banks for charging unregulated interest rates (on the overdues) is that credit card outstandings are unsecured in nature. But whether that justifies levying high interest rates is point on which the RBI should have a say.

The cardholder also has to be eternally vigilant, scrutinising every bill for any unexpected debits.

All said, there is an urgent need for protecting the unwary cardholder from the dubious tactics adopted by banks.

V. Jayaraman

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