Each bank / NBFC must have a well documented policy
and a Fair Practices Code for credit card operations. In March 2005, the IBA
has released a Fair Practices Code for credit card operations which could be
used by banks / NBFCs. The bank / NBFC's code should at a minimum incorporate
the relevant guidelines contained in this circular in their Fair Practices Code.
Bank / NBFCs should widely disseminate the contents thereof including through
their websites latest by August 31, 2005.
1. Issue of cards
a. While issuing credit cards,
banks / NBFCs must be responsible and issue cards only to those with independent
financial means after completion of all KYC requirements. The card issuing bank
/ NBFCs would be solely responsible for fulfillment of all KYC requirements,
even where DSAs / DMAs or other agents solicit business on their behalf.
b. As holding several credit cards
enhances the total credit available to any consumer, banks / NBFCs may fix maximum
credit limit having regard to the means of the customer.
c. While cards may not be issued
to persons including students and others with no independent financial means,
add-on cards i.e. those that are subsidiary to the principal card, may be issued
with the clear understanding that the liability will be that of the principal
card holder.
d. While issuing cards, the terms
and conditions for issue and usage of a credit card should be mentioned in clear
and simple language (preferably in English, Hindi and the local language) comprehensible
to a card user. The Most Important Terms and Conditions (MITCs) termed
as standard set of conditions, as given in the Appendix should
be highlighted and advertised/ sent separately to the prospective customer/
customer at all the stages i.e. during marketing, at the time of application,
at the acceptance stage (welcome kit) and in important subsequent communications.
2 Interest rates and other charges
a. Card issuers should ensure that
there is no delay in dispatching bills and the customer has sufficient number
of days (at least ten days) for making payment before the interest starts getting
charged.
b. Card issuers should quote annualized
percentage rates (APR) on card products (separately for retail purchase and
for cash advance, if different). The method of calculation of APR should be
given with a couple of examples for better comprehension. The APR charged and
the annual fee should be shown with equal prominence. The late payment charges
including the method of calculation of such charges and the number of days should
be prominently indicated. The manner in which the outstanding unpaid amount
will be included for calculation of interest should also be specifically shown
with prominence in all monthly statements. Even where the minimum amount indicated
to keep the card valid has been paid, it should be indicated boldly that the
interest will be charged on the amount due after the due date of payment.
c. The bank / NBFC should not levy
any charge that was not explicitly indicated to the credit card holder at the
time of issue of the card and getting his / her consent.
d. The terms and conditions for
payment of credit card dues including the minimum payment due should be stipulated
so as to ensure that there is no negative amortization.
e. Changes in charges (other than
interest) may be made only with prospective effect giving notice of at least
one month.
3. Wrongful billing
a. The card issuing bank / NBFC
should ensure that wrong bills are not raised and issued to customers. In case,
a wrong bill is issued and the customer protests, the bank / NBFC should provide
explanation and documentary evidence without delay to the customer, within a
maximum period of a fortnight, with a spirit to amicably redress the grievances
of the customer.
b. To obviate frequent complaints
of delayed billing, credit card issuing bank / NBFC may consider providing bills
and statements of accounts online, with suitable security built therefor.
4. Use of DSAs / DMAs and other
agents
a. When banks / NBFCs outsource
the various credit card operations, they have to be extremely careful that the
appointment of such service providers do not compromise with the quality of
the customer service and the bank / NBFC’s ability to manage credit liquidity
and operational risk. In the choice of the service provider, the bank / NBFCs
have to be guided by the need to ensure confidentiality of the customer’s records,
respect customer privacy, and adhere to fair practices in debt collection.
b. Conduct for the Direct Sales
Agents (DSAs) formulated by the Indian Banks’ Association (IBA) could be used
by bank / NBFCs in formulating their own codes for the purpose. The bank / NBFCs
should ensure that the DSAs engaged by them for marketing their credit card
products scrupulously adhere to the bank / NBFC’s own Code of Conduct for credit
card operations which should be displayed on the bank / NBFC’s website and be
available easily to any credit card holder.
c. The bank / NBFC should have
a system of random checks and mystery shopping to ensure that their agents have
been properly briefed and trained in order to handle with care and caution their
responsibilities, particularly in the aspects included in these guidelines like
soliciting customers, hours for calling, privacy of customer information, conveying
the correct terms and conditions of the product on offer etc.
5. Protection of Customer Rights
Customer’s rights in relation to
credit card operations primarily relate to personal privacy, clarity relating
to rights and obligations, preservation of customer records, maintaining confidentiality
of customer information and fair practices in debt collection. The card issuing
bank / NBFCs would be responsible as the principal for all acts of omission
or commission of their agents (DSAs / DMAs and recovery agents).
i. Right to privacy
a. Unsolicited cards should not
be generally issued. 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 / NBFC 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.
b. The card issuing bank / NBFC
should not 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..
c. The card issuing bank / NBFC
should maintain a Do Not Call Registry (DNCR) containing the phone numbers (both
cell phones and land phones) of customers as well as non-customers (non-constituents);
who have informed the bank / NBFC that they do not wish to receive unsolicited
calls / SMS for marketing of its credit card products.
d. The intimation for including
an individual’s telephone number in the Do Not Call Registry (DNCR) should be
facilitated through a website maintained by the bank / NBFC or on the basis
of a letter received from such a person addressed to the bank / NBFC.
e. The card issuing bank / NBFC
should introduce a system whereby the DSAs/ DMAs as well as its Call Centers
have to first submit to the bank / NBFC a list of numbers they intend to call
for marketing purposes. The bank / NBFC should then refer to the Do Not Call
Registry (DNCR) and only those numbers which do not figure in the Registry should
be cleared for calling.
f. The numbers cleared by the
card issuing bank / NBFC for calling should only be accessed. The bank / NBFC
would be held responsible if a Do Not Call Number (DNCN) is called on by its
DSAs / DMAs or Call Centre/s.
g. The card issuing bank / NBFC
should ensure that the Do Not Call Registry (DNCR) numbers are not passed on
to any unauthorised person/s or misused in any manner.
h. Bank / NBFCs/their agents should
not resort to invasion of privacy viz., persistently bothering the card holders
at odd hours, violation of 'do not call' code.
(ii) Customer confidentiality
a. The card issuing bank / NBFC
should not reveal any information relating to customers obtained at the time
of opening the account or issuing the credit card to any other person or organization
without obtaining their specific consent, as regards the purpose / s for which
the information will be used and the organizations with whom the information
will be shared. The banks / NBFCs should satisfy themselves, based on specific
legal advice, that the information being sought from them is not of such a nature
as will violate the provisions of the laws relating to secrecy in the transactions.
The bank / NBFC would be solely responsible for the correctness or otherwise
of the data provided for the purpose.
b. In case of providing information
relating to credit history / repayment record of the card holder to a credit
information company (specifically authorized by RBI), the bank / NBFC may explicitly
bring to the notice of the customer that such information is being provided
in terms of the Credit Information Act (to receive President’s assent).
c.Before reporting default status
of a credit card holder to the Credit Information Bureau of India Ltd. (CIBIL)
or any other credit information Company authorized by RBI, banks / NBFCs may
ensure that they adhere to a procedure, duly approved by their Board, including
issuing of sufficient notice to such card holder about the intention to report
him/ her as defaulter to the Credit Information Company. The procedure should
also cover the notice period for such reporting as also the period within which
such report will be withdrawn in the event the customer settles his dues after
having been reported as defaulter. Banks / NBFCs should be particularly careful
in the case of cards where there are pending disputes. The disclosure/ release
of information, particularly about the default, should be made only after
the dispute is settled as far as possible. In all cases, the well laid down
procedure should be transparently followed.
d. The disclosure to the DSAs
/ recovery agents should also be limited to the extent that will enable them
to discharge their duties. Personal information provided by the card holder
but not required for recovery purposes should not be released by the card issuing
bank / NBFC. The card issuing bank / NBFC should ensure that the DSAs/ DMAs
do not transfer or misuse any customer information during marketing of credit
card products.
(iii) Fair Practices in debt collection
(a) In the matter of recovery of
dues, banks / NBFCs may ensure that they, as also their agents, adhere to the
extant instructions on Fair Practice Code for lenders (circular DBOD. Leg. No.
BC. 104 /09.07.007 / 2002–03 dated May 5, 2003) as also their own code for collection
of dues or in the absence of such a code at the minimum adopt the IBA’s Code
for Collection of dues and repossession of security.
(b) In particular, in regard to
appointment of third party agencies for debt collection, it is essential that
such agents refrain from action that could damage the integrity and reputation
of the bank / NBFC and that they observe strict customer confidentiality.
(c) The bank / NBFCs and their
agents should not resort to intimidation or harassment of any kind either verbal
or physical against any person in their debt collection efforts, including acts
intended to humiliate publicly or intrude the privacy of the credit card holders’
family members referees and friends, making threatening and anonymous calls
or making false and misleading representations.
7. Redressal of Grievances
a. Generally, a time limit of 60
days may be given to the customers for preferring their complaints / grievances.
b. The card issuing bank / NBFC
should constitute Grievance Redressal machinery within the bank / NBFC and give
wide publicity about it through electronic and print media. The name and contact
number of designated grievance redressal officer of the bank / NBFC should be
mentioned on the credit card bills. The designated officer should ensure that
genuine grievances of credit card subscribers are redressed promptly without
involving delay.
c. The grievance redressal procedure
of the bank / NBFC and the time frame fixed for responding to the complaints
should be placed on the bank / NBFC's website.
d. If a complainant does not get
satisfactory response from the bank / NBFC within 60 days from the date of his
lodging the complaint, he will have the option to approach the Office of the
concerned Banking Ombudsman for redressal of his grievance/s.
8. Internal control and monitoring
systems
With a view to ensuring that the
quality of customer service is ensured on an on-going basis, banks / NBFCs,
the Standing Committee on Customer Service in each bank / NBFC may review on
a monthly basis the credit card operations including reports of defaulters to
the CIBIL, credit card related complaints and take measures to improve the services
and ensure the orderly growth in the credit card operations. Banks / NBFCs should
put up detailed quarterly analysis of credit card related complaints to their
Top Management.
Appendix
1. Most Important Terms and Conditions (MITC)
(a) Fees and Charges
i. Joining fees for primary card holder and
for add-on card holder
ii. Annual membership fees for primary and add-on card holder
iii. Cash advance fee
iv. Service charges levied for certain transactions
v. Interest free (grace) period
vi. Finance charges for both revolving credit and cash advances
vii. Overdue interest charges—to be given on monthly and annualised basis
viii. Charges in case of default
(b) Drawal limits
i. Credit limit
ii. Available credit limit
iii. Cash withdrawal limit
(c) Billing
i. Billing statements—periodicity and mode of
sending
ii. Minimum amount payable
iii. Method of payment
vi Billing disputes resolution
v. Contact particulars of 24 hour call centres of card issuer
vi. Grievances redressal escalation—contact particulars of officers to be
contacted
(d) Default
i. Recovery procedure in case of default
ii. Recovery of dues in case of death / permanent incapacitance of card holder
iii. Available insurance cover for card holder and date of activation of policy
(e) Termination / revocation of card membership
i. Procedure for surrender of card by card holder
- due notice
(f) Loss/theft/misuse of card
i. Procedure to be followed in case of loss/
theft/ misuse of card- mode of intimation to card issuer
ii. Liability of card holder in case of (i) above
(g) Disclosure
i. Type of information relating to card holder
to be disclosed with and without approval of card holder
2. Disclosure of MITC Stage Items to be disclosed
:
(i) During marketing Item nos: a
(ii) At application Item nos: a, e and g
(iii) Welcome Kit Item nos: all items from a to g
(iv) On billing Item nos: a, b and c,
(v) On an ongoing basis any change of the terms and conditions
Note :
(i) The font size of MITC should be minimum Arial-12
(ii) The normal terms and conditions communicated by the card issuer to the
card holder at different stages will continue as hitherto.
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