Issuers and agents asked not to use intimidation or harassment to collect fees
Issuers and agents asked not to use intimidation or harassment to collect fees
The Reserve Bank of India (RBI) on Thursday urged credit card companies not to issue unsolicited credit cards or top-up an existing card without the customer’s express consent, or face double the bill as a penalty.
It also urged card issuers and third-party agents not to use intimidation or harassment to collect fees from customers.
In its main instructions on credit card and debit card issuance, RBI said that “issuance of unsolicited cards/upgrades is strictly prohibited.”
These instructions are effective as of July 1, 2022.
In the event that an unsolicited card is issued, or an existing card is updated and activated without the express consent of the recipient, the card issuer must reverse the charges and pay a penalty of twice the amount charged.
Under the main directives, commercial banks with net assets in excess of £100 billion can engage in credit card business either independently or in association with other card-issuing banks/non-bank financial corporations (NBFC).
Regional Rural Banks (RRBs) are also permitted to issue credit cards in cooperation with their sponsor bank or other banks.
“In addition, the person in whose name the card is issued may also contact the RBI Ombudsman, who will determine the amount of compensation for the loss to be paid by the card issuer to the recipient of the unsolicited card, in accordance with the provisions of the ombudsman scheme the complainant’s time, the costs incurred, the harassment and the mental anguish he/she suffered,” the central bank said.
The RBI further said that NBFCs may not engage in credit card business without their prior approval: “Without prior approval from the Reserve Bank, NBFCs shall not issue any debit card, credit card, charge card or similar product, virtually or physically.”
With regard to collecting fees from customers, RBI has urged issuers to ensure that they and their agents comply with the Lender Fair Practices Code.
In particular, with regard to the use of third-party collection companies, card issuers must ensure that their agents refrain from actions that could damage their integrity and reputation and maintain strict customer confidentiality, she added.
“Card issuers/their agents shall not engage in any form of verbal or physical intimidation or harassment of any kind against any person in the course of their debt collection efforts, including acts intended to publicly humiliate or invade the privacy of the credit card holder’s family members, referees and friends, threatening and anonymous calls or make false and misleading representations,” it said.
Regarding issuance of debit cards, the RBI said that banks should not force a customer to use the debit card function and should not tie the issuance of the debit card to the use of other services of the bank.
Additionally, Apex Bank said that a co-branded credit/debit card must specifically state that it was issued under a co-branded agreement.
“The Co-Branded Partner may not promote/market the Co-Branded Card as its own product. All marketing/promotional materials must clearly state the name of the card issuer,” it said.
NBFCs that wish to enter into a co-branding agreement for credit card issuance are also covered by the guidelines.
Among other things, the RBI called on the card issuers to set up and widely publicize a complaint resolution mechanism.
Card issuers must ensure their call center agents are properly trained to competently handle and escalate a complaint if necessary, she added.
In addition, card issuers are obliged to compensate the complainant for the loss of time, expenses, financial loss, as well as for the harassment and mental anguish he has suffered due to the fault of the card issuer and where the complaint is not resolved in a timely manner.
“If a complainant does not receive a satisfactory response from the card issuer within a maximum of one month from the filing of the complaint, he/she has the opportunity to contact the office of the relevant RBI Ombudsman to resolve his/her complaints. ‘ it added.
