Foreign banks may be rapped for denying credit cards

Finance Minister P Chidambaram today said foreign banks practising 'hidden' policy of denying credit cards and loans to police personnel, politicians and advocates would come under the Reserve Bank of India (RBI) scrutiny.

Replying to a debate on the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (Amendment) Bill, 2005, Chidambaram said strong action would be taken against the foreign banks for violating the code of banking practices.

"I will see that this kind of aberrations do not take place. I will certainly ask the RBI to find out how many banks adhere to the new code of banking practice that came into being recently," Chidambaram said after members, cutting across party lines, criticised foreign banks that denied such services to politicians, advocates and police personnel.

Chidambaram said the government has now put in place a banking ombudsman scheme and pleaded with members to send their complaints to the ombudsman for correcting this distortion.

"Please complain to the ombudsmen... Let the ombudsmen rap (foreign banks) on the knuckles... When some get rapped others will start behaving," he said at the end of the debate on the bill.

"I know the name of the bank," he said when Amar Singh said ABN AMRO had denied a car loan to him when he approached them saying they don't give loans to politicians.

The minister said the new code, which came into being two-and-a-half months back, contained a lot of guidelines which some banks practice and some do not. The RBI would see how the code functions in the next few months, he said.

The Rajya Sabha approved the bill. It was approved by the Lok Sabha yesterday. The bill would now be sent to the president for enacting it into a law.