View promise to close your credit account for a smaller amount with caution.
VN Kulkarni, chief counsellor, Abhay Credit Counselling Centre, thought he had probably dealt with everything wrong that exists in the banking system. He had been a general manager in a nationalised bank. Now he counsels people to help them get out of debt or fight banks’ wrongdoings. But when Shrikrishna Sharma (name changed on request), a retired Larsen and Tubro employee, approached him over a year back with his problem, even Kulkarni was stumped.
Sharma had settled the dues on his credit card three months back. However, the bank was still calling him to pay up. When Sharma showed the ‘no-dues letter’ to the recovery officer, he was told him that there was no record of such a letter.
| THE RIGHT DEAL | |
| Scenario | Solution |
| You want to close/surrender card or close a loan | Call up the call centre and ask for the final settlement. If not satisfied, write an email to the customer care and pay as per the response |
| Bank levies inappropriate charges | Do not stop your payments. Just keep the particular amount as outstanding until the bank/ombudsman settles it |
| Agent forgets receipt book or says it is full | Ask him to come later. Do not give the payment if he offers to write it on a piece of paper |
| Agent says he is a policeman or bank executive or does not have an identity card | Insist on the ID. Note down all details. If no ID, ask him to come back |
| Agent offers to settle the outstanding at lower amount; promises to drop your name from credit bureau and court case, if any | Ask him to get a written proposal from the bank |
| Bank calls the receipt or settlement letter fake or says it doesn’t have a record | Make a written complaint, preferably through email. If there is no solution within a month, approach the banking ombudsman |
It started with Sharma wanting to surrender his credit card. When he sought the bank’s help to do the same, a collection agent was sent to his house. When Sharma sought a settlement at less than the outstanding amount of Rs 80,000, he was given the option of making monthly payments of Rs 7,150 for seven months. After that, the account would be closed.
Sharma paid his dues for seven months. However, three months after the final payment, the bank called him up for the remaining Rs 30,000 and an interest of Rs 5,000. When he approached the collection officer of the bank, he was told there was no letter to back his statement. Not willing to give up, Sharma reported the matter to the police and the investigation revealed that the collection agent had provided him a fake letter. “But what came next was even more surprising,” adds Kulkarni.
The agent had actually deposited the money with the bank, and even been paid a commission of around 1 per cent for his efforts. The police inquiry revealed there were six other people like Sharma.
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Despite approaching the issuer with the police investigation report, the bank did not budge. Finally, Sharma went to the banking ombudsman, who got him a compensation of Rs 50,000 for deficiency of service. In all, Sharma got relieved of the Rs 30,000 that the bank claimed was outstanding and got all that he paid to the bank as EMIs.
Banking officials said it’s mostly defaulters who fall prey to such incidents because they are easy targets. “The fact is that no bank is willing to part with any money, be it the principal amount or the interest. In rare cases, banks allow easy payment to customers in a genuine financial crunch,” said an official with a private bank.
For those who have not defaulted, banks would never settle for an amount lower than the actual outstanding. Sarfaraz Khan, who works with a publishing company, for example, wanted to help a sales executive. He took a personal loan on his credit card. In the second month, Khan wanted to pay up the Rs 35,000 loan. The collection agent offered him a relief of Rs 4,000. On the receipt, the executive mentioned that it was the final payment and signed it. Now, the bank is asking him to pay the remaining amount.
“Never take the receipt as the final settlement note,” said the head of cards with a private bank. This is because banks have started printing in the receipts that “the payment is not a discharge of your liability and cannot be treated as the full and final settlement”.
“If such a case reaches court, there is a high probability that it would be considered as the customer’s negligence,” said Kulkarni.
Even if the bank offers a settlement lower than your outstanding, it will be only after a mid-level official meets you and agrees with your plea. Even in such cases, experts say, the customer should negotiate that prior to the payment the bank should assure you in writing that it will drop the legal case, if any, and get your name removed from credit bureaus.