Banks to pay penalty for misuse of unsolicited credit cards

MUMBAI: Aggressive marketing by credit card issuing banks may bounce back on them with the Reserve Bank making it clear that the banks will have to pay a penalty for harassing customers over misuse of unsolicited cards.

The banking regulator in its recent guidelines has said if a customer is billed for unsolicited card, which is issued and activated without his consent, the card issuing bank will have to pay a heavy penalty to the customer.

"The card issuing bank shall not only reverse the charges forthwith (on misuse of unsolicited cards) but also pay a penalty without demur to the recipient amounting to twice the value of charges reversed," the apex bank guidelines said.

In addition, the aggrieved person will also be allowed to approach the Banking Ombudsman who will ask the issuing bank to compensate the customers for harassment, mental anguish, expenses incurred and loss of time.

Pointing out that there have been instances where unsolicited cards have been misused before reaching the person, the RBI said, "Any loss rising out of misuse of unsolicited cards will be the responsibility of the card issuing bank only".

It further clarified that the person in whose name unsolicited card has been issued will not be responsible for any loss arising from its misuse by unauthorised person.

In order to prevent misuse of lost and stolen card, the RBI has asked banks to issue signature-laminated cards with photograph and pin number.

RBI has also asked banks to monthly bills in time and give customers at least 15 days notice to clear their dues. "There have been instances where banks have issued credit card statements after undue delays and demanded payments," it said.