Clean up your act, RBI tells credit card issuers

Lending a sympathetic ear to customers who are harassed by unsolicited calls from banks offering credit cards, RBI said if a bank issues a credit card to a customer without the customer's consent and also bills them when the customer uses the card, the bank and not the customer would face the music.

Of late, banks, in order to expand their loan portfolios, have been issuing unsolicited credit cards to their customers - both depositors and borrowers and soon thereafter, send bills riddled with joining fee, annual fee, card activation fee, insurance fee, etc. Non-payment or delay in payment draws penal interest, and the amount balloons further.

"The unsolicited credit cards should not be issued and that in case an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank shall not only reverse the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed," RBI said, in the circular issued on July 23.

"The person in whose name the card is issued can also approach the Banking Ombudsman who would determine the amount of compensation payable by the bank to the recipient of the unsolicited credit card as per the provisions of the Banking Ombudsman Scheme, 2006, i.e. for loss of complainant's time, expenses incurred, harassment and mental anguish suffered by him," RBI said.

Banks which issue "free of charge" or "lifetime free" credit cards to customers should also clearly specify clearly whether there are any "hidden charges" or conditions attached whenever they dole out the credit cards.