In light of ever-increasing incidents of credit card frauds and exploitation by one-sided terms of issuing banks RBI came up with guidelines on Credit Cards. 1 This guideline touches upon the touch upon issues such as credit limit, interest rate, wrong billing, sharing of credit information and fair practices, and code of conduct for the issuers of credit cards. 2
Henceforth, credit card issuers will have to stick to these norms, which, among other things, deal with issuance of additional cards, printing of annual interest rates, enhancement of credit limits, collection of debts, etc. Second part of the circular stipulates guidelines deals with the fair practice code for the issuance of the credit cards to the consumers. This part of the guideline directs the banks to follow the norms laid down by the IBA (Indian Bank Association) in the Fair Practice Code for credit card operation.
It also obligates the issuing bank to dispatch of the bills in appropriate time. So the consumer gets sufficient time for the payment of the bill, Moreover, the bank should also quote the percentage rate at which the interest will be charged, including the method for the calculation of the interest with few examples.
Banks must be extremely careful for the appointment of the service providers, since the bank has to outsource the various credit card operations. The agents of the banks have to follow the code of conduct formulated by the Indian Banks Association. The guidelines provided by the RBI suggest the banks to evolve the system for the random checks of the agents too. 3
The next important direction given by RBI is the setup of the mechanism for the redressal of the grievances of the consumers. It also says that the complaint must be preferred within 60 days time period. The website of the banks must have the complete detail of the redressal grievance mechanism. The guideline also direct for the compensation if the complains have not been satisfactory resorted. The compensation will be for the time loss, financial loss, harassment, as well as the mental agony, which the person has suffered.
The Reserve Bank of India has reserved the right to impose any penalty on a bank under the provisions of Banking Regulation Act, 1949 4, Reserve Bank of India Act, 1934 & respectively for the violation of any of the provisions issued under these guidelines 5. In toto it is submitted that, the RBI guidelines on credit cards is an important step towards a stronger consumer protection regimes.