RBI to set norms for credit card bills

NEW DELHI: If you are among thousands of credit card holders who have been blacklisted in the banks' central database even after dues have been settled, there's some relief coming your way. RBI is framing guidelines telling banks not to declare someone a defaulter if the person has settled his or her account with the bank after paying the negotiated amount.

At present, even if a card holder pays the negotiated amount, the client is continued to be treated as a defaulter in the bank's records. Because of this, the name features in the defaulters list prepared by Credit Information Bureau of India Ltd (CIBIL), which depends on the information provided by banks for the purpose.

This makes most loans off-limits for the 'blacklisted' person — be it a personal or house loan — from any bank or finance company. Left with no choice, the customer has to settle the new bill raised by the bank, which is the 'balance amount' from the earlier settlement plus penalties and interest. "The present practice is nothing short of blackmail of customers by banks", said a harassed customer Arvind Gupta (name changed), who is CEO of an IT company.

He had to pay Rs 75,000 recently to clear his dues, which had previously been settled for 50% of the then outstanding amount — Rs 6,200 in 2001. He was forced to pay when his home loan application was turned down by a bank as he was in CIBIL's defaulter list.

An RBI spokesperson said the central bank is seized of the matter and will soon come out with an appropriate solution. CIBIL MD Arun Thukral said that RBI has held a series of meeting on the issue with banks and CIBIL. He said at present when dues are settled with a customer, the bank usually treats the rest of the amount as "written off".

In many cases, it has been found that banks raise demand for a small leftover amount, which according to the customer should not have been there at all. In many cases, it's the annual fees which the banks had said won't be charged. Take example of Arun Sharma (name changed), who works for a big corporation. After he had disputed a bill of Rs 900 raised by the bank, he was told to settle dues by paying Rs 450.

However, he continued to receive statements which first showed Rs 450 as outstanding and then the amount kept increasing. After a while, he received a call from the bank asking him to clear his dues of around Rs 1,000.

The bank again offered to settle the dues for the 50% of the amount and said it will issue him an "all dues cleared" certificate if he made the payment. Sharma paid Rs 500 but the certificate from the bank never came.