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Business News/ Opinion / Online-views/  Phone bills-credit score: a fair link-up?
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Phone bills-credit score: a fair link-up?

Phone bills-credit score: a fair link-up?

Shyamal Banerjee/MintPremium

Shyamal Banerjee/Mint

The telecom industry has been in the news for all the wrong reasons in the last year or so. Somehow in the intense 24x7 coverage of the 2G licensing scandal, an important news item got missed. If newspaper reports are to be believed, Credit Information Bureau (India) Ltd, or Cibil, is talking to various telecom companies to incorporate the consumer’s telecom bill payment history as part of his overall credit information. If you default on your telecom bills, it is useful information for a prospective lender to have while deciding on your loan application. The idea is “if you want a home loan you better not delay paying your telephone bill". At first glance, there is very little to fault with this basic idea. The retail lending industry is already reaping the rewards of consumers becoming aware of the importance of their credit history. The consumers also benefit as the banks’ non-performing assets come down and the overall cost of borrowing comes down for customers who take care to maintain a good credit history. Prime facie it is a win-win situation.

Shyamal Banerjee/Mint

The telecom sector presents a completely different picture. Firstly, Telecom Regulatory Authority of India, or Trai (which regulates the sector), claims it has no jurisdiction to decide on grievances between telecom companies and consumers by interpreting its charter very narrowly and at least publicly has washed its hands off by just asking the telecom companies to set up an internal three-tier grievance redressal structure. There is no reporting and no independent verification and enforcement machinery. So now the telephone company’s own grievance redressal machinery is responsible for solving grievances of customers without any oversight by the regulator. I mean how many regulators claim they are “not empowered to handle individual consumer complaints against service providers" and feel they have done their job by recommending the setting up of an ombudsman to the government and state that, in the meanwhile, the only institutional mechanism available to aggrieved consumers are the overburdened consumer courts.

Like the early days in retail lending, the telecom sector is rife with billing disputes and consumer complaints with no effective redressal mechanism in sight. In fact, some telecom companies have taken a leaf out of the early practices of the retail lending business and appointed “collection agents" for even disputed dues. RBI itself has thoroughly streamlined the process of appointment and usage of “collection agents" by the banks as a result of which complaints about strong-arm collection tactics have almost disappeared in the banking sector. One hopes the telecom industry is not looking to occupy the media space, thus vacated by the retail lending industry.

It is with this background that one needs to see the proposal to include your telecom payment history as a part of your credit information. It will be extremely dangerous to alter the equation between the consumer and the telecom company so decisively in favour of the telecom company, especially where consumer grievance redressal mechanism is almost non-existent and whatever grievance redressal mechanism exists is not supervised or verified by any independent authority.

Fortunately, the proposal will need RBI’s approval before it can be implemented. The Act under which any credit information company is licensed has clearly laid down what constitutes “credit information" and from whom it can be collected. Telecom companies are allowed to access your credit information report if you apply to them for a post-paid connection but their billing history and your payment record with them does not constitute “credit information". RBI has the power to notify if your repayment record with the telecom companies can be considered as “credit information". Hopefully, RBI will take into account almost the complete absence of any effective grievance redressal mechanism in the telecom industry and not provide this approval.

After all, the fate of 50 million post-paid consumers hang on to this decision. The telecom industry has only itself to blame for not getting access to what could have been a very effective means to make sure post-paid bills are paid on time. If the telecom industry does some introspection and comes up with a more effective consumer grievance redressal mechanism, it will be a win-win situation for both the telecom companies as well as the consumers.

Harsh Roongta is CEO, Apnapaisa.com.

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Published: 20 Feb 2012, 09:42 PM IST
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