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    Creative Commons License
    Rabble Rousing Random Ramblings by S Jagadish is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported License.

    November 30, 2005

    Kudos to the RBI!

    Last week, the Reserve Bank of India came out with a set of regulatory guidelines related to the way banks (and NBFCs) handled their credit card operations. Banks need to implement these guidelines immediately. Below are some of the salient features of the guidelines. Some of it is lifted verbatim, while I've added my own bits in a few places.

    The terms and conditions to be mentioned in a clear and single language, comprehensible to the card user. Key terms and conditions should be highlighted and sent separately to the [prospective] customer at every stage.

    There should be no delay in dispatching bills and the customer should be given at least one fortnight to make the payment before interest is charged. The interest charges must be mentioned as annualized charges and the method of calculating the charge should also be displayed. Banks normally only mention the monthly charges. For e.g. an interest rate of 2% per month amounts to nearly 27% annual interest.

    Charges which were not explicitly indicated at the time of issue of the card should not be levied, unless these are government/statutory authority charges. Any changes in charges should be preceded by a one month notice. Users who want to surrender their cards because of these charges should not be penalized in the form of these charges.

    It recommends banks provide users the facility to view their bills online.

    Banks are responsible for the conduct of agents, including on issues like soliciting customers, hours for calling, privacy of customer information, conveying the correct terms and conditions of the product on offer, etc.

    Unsolicited credit cards, loans, credit limit upgrades and other such offers must not be issued. Banks face penalties in case these offers are activated and customers billed for the same.

    Banks should maintain a 'Do Not Call Registry' for customers and non-customers. Banks will have to cross-check with their agents and remove names/numbers of those people who've included themselves in the DNCR.

    Absolutely no intimidation, harassment etc. while doing debt collection.
    Admittedly, I would have really loved if the RBI had issued a guideline which penalized banks for sending unsolicited credit cards rather than penalize them only on activation/billing.

    I have been the victim on three occasions. Within a span of a week a few months ago, I received unsolicited credit cards from ICICI Bank and ING Vysya Bank. I wrote to the credit cards division manager at each bank indicating that I was unhappy with the unsolicited despatch of cards and that it amounted to a breach of my privacy. I pointed out that I had been their customer for a while and hence their act also made me lose trust in them. At that stage, there were a few reports about the RBI contemplating guidelines related to banks/NBFCs issuing unsolicited credit cards/loan schemes etc. So I added in my letters that I would not hesitate to approach the ombudsman and the RBI if the practice was repeated. A week later, I received phone calls from both banks apologizing for their acts. One of the chaps was clever enough to ask me if I needed a card, since this would now qualify as a solicitation

    Last month, I received unsolicited offers for a personal loan, a small & medium enterprise savings account and a credit card from HSBC. The irony of it is that in spite of me having banked with them for over five years, they were unaware that I am as close to owning a small & medium enterprise as Ashley Giles is to being a quality spinner. I wrote a letter to HSBC along the same lines as above. I haven't heard from them yet.

    But overall, I think this is a wonderful move by the RBI. We've all been hounded by agencies calling us up on mobile phones (typically) and land lines (rarely) offering us the latest and greatest credit card, free of charge for life etc. etc. If banks implement the letter and spirit of the guidelines, customers will benefit significantly. In addition, the lost trust could be restored. For the last year or so, whenever I've got a call from a bank's agent in the context of a credit card, my replies are one of the following:
    • I already have this card
    • I am willing to take the card, provided you pay the bills
    These two methods have worked fairly successfully so far in the sense that the phone conversations are short and sweet. But this still doesn't imply that I will not get the call in the first place. Hopefully I stop getting these unsolicited calls.

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