Our Bureau

Mumbai, Nov. 22

THE credit card user in India has faced several problems, including bills not being received on time, wrong bills and, worst of all, receiving unsolicited cards. But all this may soon become history.

Reserve Bank of India has issued guidelines to banks and non-banking finance companies (NBFCs) on credit card operations, which touch upon issues such as credit limit, interest rate, wrong billing, sharing of credit information and fair practices, and code of conduct for the issuers.

The guidelines state that each bank and NBFC must have a Fair Practices Code for credit card operations, which should be widely displayed on their Web sites before November 30.

As per the guidelines, framed by the RBI Working Group on Regulatory Mechanism for Cards, banks and NBFCs issuing credit cards will now have to ensure that customers get at least 15 days to make payment before charging interest for delayed payment.

In the case of a wrong bill, the card issuer will have to explain and provide the customer with documentary evidence within 60 days.

The issuers will have to give at least one-month notice before hiking any charge. Also, if a customer wishes to surrender his credit card on account of change in charges, the bank will not charge him extra for such closure.

Banks should also maintain a Do Not Call Registry (DNCR) containing phone numbers of customers as well as non-customers who have informed the bank they do not wish to receive unsolicited marketing calls for credit card products. The DNCR should be set up within two months, the guidelines said.

In case a bank issues an unsolicited card without the consent of the recipient, the bank should reverse the charge and also pay a penalty amounting to twice the value of the charges reversed.

The monthly statement sent to customers must carry information such as the annualised percentage rates, annual fee and late payment charges and the method of calculation of rates.

RBI has also asked banks or NBFCs who outsource credit operations to ensure confidentiality of customers' records. Banks can also formulate their own code of conduct for direct sales agents or use the code formulated by the Indian Banks' Association and display these on their Web site.

In case the credit card is issued to persons without independent financial means such as students, the liability will be that of the principal cardholder.

With regard to multiple credit cards, the issuer should assess the limit on the basis of self-declaration or credit information, the guidelines said.

Banks must also publicise their grievance redressal machinery and mention the name and contact number of the officer concerned.

If the complaint is not addressed within 30 days, the customer can approach the Banking Ombudsman.

RBI said it has the right to impose any penalty on a bank or NBFC for violation of any of these guidelines.

(This article was published in the Business Line print edition dated November 23, 2005)
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