RBI to clamp down on credit card companies for cheating customers

The increasing number of complaints against the credit card companies has led the Reserve Bank of India (RBI) to take stringent actions against them for issuing cards recklessly.

RBI has asked the Ahmedabad based Consumer Education Research Society (CERC) to chalk out a plan to rate the services of the credit card issuing companies.

"The credit card companies need to be more transparent. We need to develop a methodology or a system to rate the services of these companies," said Y V Reddy, governor, (RBI), who had also been cheated by one of the credit card company before taking the charge as governor of the apex bank.

Reddy was in Ahmedabad to attend the first meeting of the Task Force on Urban

Cooperative Banks (TAFCUB), following which he visited Indian Institute of Management, (Ahmedabad) and the Consumer Education Research Society. Reddy also asked CERC to develop a methodology to rate the services of credit card issuing companies and assured full support from the apex bank.

The Ahmedabad-based consumer rights organisation, has objected on the unilateral and 'unfair' terms and conditions laid by certain banks issuing credit cards and has urged the RBI to act on its suggestions to protect the interests of the credit card holders.

"We have been receiving large number of complaints from the credit card users, who are being harassed by credit card companies for aggressive marketing, excessive billing without usage, false promises thereafter resulting in lots of charges, or receiving threats from Mafia's for collection of dues. A member of the task force is constituted by the Union government, but there are no specific law regulating the management of consumer credits in India, except the 'Guidelines on Fair Practices Code for Lenders' issued by Reserve Bank of India." Manubhai Shah, managing trustee, CERC told Business Standard.

By and large, foreign countries have legislations that give insurance cover to lost, stolen or misplaced cards to protect the consumers. CERC proposed to have such provisions in India.

RBI had released on April 25, the Report of its Working Group on Regulatory Mechanism for Credit Cards.

According to CERC, the printed conditions by the credit card issuing banks are 'unilateral and unfair,' presented to the consumers on the `take it or leave it' basis, leaving no chance for any question or negotiation.

"It is positive step taken by the apex bank and we will set up a group to rate the services of this credit card issuing companies with support from RBI," said Shah.