RBI to Penalize Banks for Unsolicited Cards & Actions – Empowers Customers

RBI Penalties for Unsolicited CardsAfter Years of Pleading with the Banking Regulator, RBI has finally obliged to our requests made over the last several years to Penalize the Banks for Unsolicited Actions.

Indian banks in greed for Profits resorted to unethical business practices of issuing Unsolicited Credit Cards. RBI in its MasterCircular dated 01-Jul-2013 with reference no- RBI/2013-14/60 DBOD.No.FSD.BC.4 / 24.01.011/ 2013-14 has clearly stated that

In case, an unsolicited card is issued and activated without the written 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.

In addition, 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 card as per the provisions of the Banking Ombudsman Scheme 2006

Consumer Protection for Loss of Unsolicited Cards
RBI has clarified that any loss arising out of misuse of such unsolicited cards will be the responsibility of the card issuing Bank / NBFC only and the person in whose name the Card is issued cannot be held responsible.

Insurance and Other Add On benefits of Cards to be Taken Specifically in writing
Certain Banks were issuing Insurance and other Add Ons along with the Credit Card. RBI has clearly stated that separate and specific written consent of the consumer need to be taken and it cannot be implied that by applying for credit card the consumer has given his consent for Add On products.

Upgrade of Credit Cards Cannot be Done with Consumer Consent
The card issuing Bank cannot unilaterally upgrade credit cards and enhance credit limits. Prior consent of the borrower should invariably be taken whenever there are any change/s in terms and conditions. Does this also mean that they cannot start levying Annual Fees on credit Cards all of a sudden ? Because it is a Major Change in Terms & Condition under which the customer had subscribed to the card.

The RBI has also taken several other measures on Credit Bureau Reporting Standards, Grievance Redressal and Fraud Control which we’ll cover shortly in the next post.

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