Chennai: Credit card holders in India have been ripped of Rs 6,000 crore as “extra charges” by banks in a span of ten years, according to a rights group. This is in addition to the fact that Indians pay the highest rates of interest in the world,
“The banks have already extracted around Rs 6,000 crore in the name of late fee, cash advance fee, billed finance fee, over-limit fee, cash withdrawal fee, cheque pick up fee and service taxes on all these fees,” C V Gidappa, General Secretary of Credit Card Holders’ Association of India (CCHAI), told PTI here quoting a study conducted by his group.
A top official of a multinational bank, who did not want to be named, said banks charge more for credit card transactions as they foresee higher risk of default due to the insecure nature of transactions. Further, credit cards are more convenient tools for easy borrowing.
“Credit card is a very useful instrument as a means of payment. But it should be used as a borrowing tool very sparingly and if so for as short a time as possible”, he cautioned.
As part of the study, the association went through the balance sheets, and Profit and Loss statements of all private as well as nationalised banks, checking their interest income and non-interest income since 1992 after the introduction credit cards in India, Gidappa said.
It also plans to move the Supreme Court seeking an order asking banks to pay back the extra money collected.
In some cases, customers who happen to default repayment, the situation takes a unhealthy turn with the ‘goons´ turning up on behalf of the bank, said Gidappa.
“We have received hundreds of cases where arm-twisting tactics are employed to squeeze the amount who fail to repay housing, personal and credit card dues”.
The Supreme Court also had issued a directive asking the banks not to employ ‘goons´ in January this year and resort to legal means in collecting loan amount.
Ranjitha John, a school teacher in Chennai said she had borrowed Rs 60,000 through a credit card in 2003 and by 2004 paid back Rs 2.20 lakh.In 2006, she started receiving threatening phone calls and two goons even reached the school where she was engaged in examination duty.Following the humiliation and harrasment, she filed a complaint with the consumer court where the case is pending.
Gidappa said it was after several representations to the Reserve Bank of India, the President and the Prime Minister that a voluntary watchdog, Banking Codes and Standards Board of India came into existence in February 2006.
“Though the board has set minimum standards to be followed by banks, including those related to credit card dealings, it does not have the power to punish erring banks”, said Gidappa.
After its national-level conference on 28 May, the association will also decide on filing cases against the heads of the banks in individual complaints, he said.