RBI Needs More Regulations on Credit Card Issuers

Credit Card is one of the easiest and convenient ways to Shop or Pay for Goods and Services. The industry has evolved but with the Finance Ministry moving towards Cashless transaction Society, much needs to be done to Regulate the Card industry in India. We’d like to point out some of the deficiencies in the current Credit Card eco-system which RBI can address.

  • Issue Most Important Terms and Conditions in English, Hindi and Local Language of the State [Local Language is Absent for HDFC, Kotak, ICICI and SBI MITCs which were examined] Print them in legible fonts rather than fine-print
  • Credit Card Interest / APR is linked to the RBI Base Rate. However, no banks are transparent on how the APR for Customer is arrived at. They just mention Monthly APR between 2.5% to 3.1%
  • Monthly statements of credit card do not carry the cautionary notice RBI has mandated. “…making only the minimum payment every month would result in repayment stretching over years with the consequence of larger interest payments…”
  • Though interest rates have been de-regulated for unsecured loans, charging a interest beyond certain level is unethical and does not conform to fair banking practices code. However, this is just in print and nothing is in practice.
  • The Most Important topic is the Terms & Conditions on which consumers affix signature where it is clearly written – “All the Fees / Charges are subject to change and at the discretion of the Bank” This is certainly not acceptable and RBI must take serious measures and put a check on banks and financial institutions.
  • Dispatch of Credit Card Bills  – This is never regular and sometimes you will receive the bill just a day or two before without even leaving room for your check payment to get cleared.

We have more recommendations coming to the RBI to help the Indian Card Industry. Your Suggestions are also welcome.

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