New Delhi: Alarmed by reports that credit card companies have collected over Rs6,000 crore ($1.5 billion) in a decade from customers by way of fines and late fee, India’s anti- monopoly watchdog has ordered a probe into the fees levied by them.
The Monopolies and Restrictive Trade Practices Commission (MRTPC) has asked the Director General of Investigation and Registration (DGIR) to probe the issue and report back, sources told PTI.
The Commission ordered the probe after taking cognizance of reports that claimed credit card issuers extracted more than Rs6,000 crore as late fee, cash, advance fee, billed finance fee, over-limit fee, cash withdrawal fee, insurance charges, cheque pick-up fee and service taxes during the past 10 years.
DGIR would direct banks to furnish details of their income during last three-four years derived from other than the credit limits (extra charges), the sources added.
As per the MRTPC Act, DGIR has to submit its preliminary investigation report before the Commission within 90 days.
The Commission has already initiated judicial enquiry against Citibank, HSBC, ICICI Bank and HDFC Bank for adopting unfair practices for selling credit cards, as the DGIR sumbitted its preliminary report in which it suspected these organisation to have violated norms.
In its report, DGIR had found that these banks were making false promises to their credit card customers and caused loss to the general public by violating the rules framed by the Reserve Bank.
It also alleged that the banks were delaying delivery of bills and realisation of cheques toward payment just to charge increased interest rate, late fee and fines.
Moreover, DGIR also found that banks were doing credit card business in the country through Direct Sales Agents, who were working either as independent contractors or on commission basis.
The Commission had initiated judicial enquiry against HDFC on November 10 last on the same grounds.
The sources said enquiries against American Express Bank, ABN Amro and country’s largest lender State Bank of India on the same issue are also going on.