RBI issues fresh guidelines for credit card services

Subscribe to Oneindia News

{image-reserve bank of india_24072008.jpg www.oneindia.com}Mumbai, Jul 24: In a move to put a curb on excessive levy and unlawful recovery by banks on credit cards, the Reserve Bank of India (RBI) on Thursday, July 24 issued fresh guidelines for the banks' credit card services.

Banks have been advised that unsolicited credit cards should not be issued and that in case they are 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 a statement here.

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 credit card as per the provisions of the Banking Ombudsman Scheme, 2006, expenses incurred, harassment and mental anguish suffered by him, RBI said.

Further, there have been instances where unsolicited credit cards issued have been misused before reaching the person in whose name the card is issued.

''It is clarified that any loss arising out of misuse of such unsolicited cards will be the responsibility of the card issuing bank only and the person in whose name the card has been issued cannot be held responsible for the same,'' RBI stated.

Referring to a study undertaken on the credit card operations of banks, based on the complaints received by the banks as also by the Offices of the Banking Ombudsmen, the central bank said ''banks should immediately ensure action in this regard and follow the fresh guidelines issued by them.'' Furhter, in cases where the banks are offering any insurance cover to their credit card holders, in tie-up with insurance companies, the banks may consider obtaining in writing from the credit card holder the details of nominees for the insurance cover in respect of accidental death and disablement benefits, the central bank said.

''Banks may ensure that the relevant nomination details are recorded by the Insurance Company,'' RBI said adding Banks may also consider issuing a letter to the credit card holder indicating the details regarding the name, address and telephone number of the Insurance Company, which will handle the claims relating to the insurance cover.

UNI

Please Wait while comments are loading...