In the terms and conditions of credit cards often, you must have read “due date” for paying credit card bills. First understand what “due date” means. As per a senior banking ombudsman official, credit card customers “unofficially’’ get “a grace period’’ of about three days after their due date in case they decide to make payment through cheque, to allow the amount to get credited into their account, which means, bank will not levy any late-payment charges.
On the other hand the heads of leading card-issuing banks have different view, they say in terms and conditions, given on bill statements and websites clearly states that cheque payment must be made three to five days (in case of outstation cheques) before the due date so that it comfortably reaches their account by the deadline.
What happens when a string of bank holidays and weekends falls between cheque deposit and its clearance? Suppose a cheque does not get cleared for reasons where consumer cannot do anything, then he/she still has to pay penalty charges.
According to Mumbai banker the due date-related disputes are common and from long time the consumers have been demanding for clarity on the issue. K Unnikrishnan, deputy chief executive, Indian Banks’ Association, while supporting said uniform norms on cheque deposit with reference to due date are required.
Sanjeev Talwar of Delhi-headquartered National Consumer Helpline stated this issue is quite serious because such a “default’’ will show up in a consumer’s credit history at Cibil (Credit Information Bureau India), from where banks gather information before deciding on sanctioning loan.
However banker added, in India, customers have to first pay a charge and then dispute will be resolved. While in developing countries, a card holder has the option not to pay a part of the billed amount in case he or she feels there is a dispute.
Thus any clear guidelines are formulated regarding this, customers should pay their payments ahead of the stated due date. Also, if they pay closer to the payment deadline, they should avoid depositing their cheques in drop boxes.
As per the Reserve Bank of India rules the banks must accept all cheques at counters and give an acknowledgment receipt to the customer. In case of any dispute this will serve as a proof of deposit.
On the other hand more and more banks are introducing “cheque deposit machines, which work like a screener and give you a receipt, which is a replica of your cheque with all the details,’’ informed a bank executive. Moreover to avoid long queues at counters, they provide the relevant proof. The consumers must remember the ruling in case of disputes rely on documentary evidence.
Friday, November 6, 2009
Tuesday, November 3, 2009
Banks slowed down on selling credit cards, learnt lesson from the credit crunch
Banks have slowed down on selling credit cards. The banks have learnt lessons from the credit crunch therefore banks are not ready to vow for unsecured credit. Moreover at least one bank is thinking of stop issuing credit cards completely. Last year when several banks and financial firms saw rise in delinquencies, they had reduced their exposure to the personal loan segment.
According to some bankers the present uncertainty grew due to "aggressive" issuance of cards by certain banks. Shameek Bhargava, managing director, cards (Asia Pacific), Deutsche Bank said, "Often this issuance was not backed by conventional forms of credit appraisals". "And it was targeted at a base of prospective customers who were already holding credit cards of one bank or the other creating over-leveraging of customers."
Often, on new card banks offered free offers such as waiving off annual charges, and issuing an additional card (add-on) for free. Due to this banks were able to attract more customers but most of the customers used a primary card, while the other cards remained unused, in their wallets, this increased the operating cost of the respective banks, informed an industry person.
In India private banks were ahead in the credit card movement, which prompted the public sector banks to join the bandwagon.
In view of this many nationalized banks and smaller private banks issued cards to their account holders while private banks offered the facility to any one who was covered under their credit card issuance norms.
But now nationalized banks have slowed down in issuing the credit card. Nagammal Reddy, managing director, Tamilnad Mercantile Bank pointed out, "We have around 5,000 card holders. While we would like to double this number, we won't aggressively market our offering like private banks to meet our target". While the Indian Overseas Bank is thinking of completely withdrawing from the credit card business. A senior official from the bank said, "There has been some talk of withdrawing from this business altogether". According to senior bank official from the bank, "Till such time, we will run the business as it is and won't be aggressive in acquiring new customers". IOB is having around one lakh credit card holders who are also account holders with the bank.
However most of the banks are planning to increase their fee-based income through banassurance and third party product offerings such as mutual funds, rather than completely being dependent on interest income.
Bhargava stated, "It is likely that the (credit card) industry will witness the comeback of fees in some fashion. This will also benefit customers in controlling the amount of credit card debt they can sustain".
According to some bankers the present uncertainty grew due to "aggressive" issuance of cards by certain banks. Shameek Bhargava, managing director, cards (Asia Pacific), Deutsche Bank said, "Often this issuance was not backed by conventional forms of credit appraisals". "And it was targeted at a base of prospective customers who were already holding credit cards of one bank or the other creating over-leveraging of customers."
Often, on new card banks offered free offers such as waiving off annual charges, and issuing an additional card (add-on) for free. Due to this banks were able to attract more customers but most of the customers used a primary card, while the other cards remained unused, in their wallets, this increased the operating cost of the respective banks, informed an industry person.
In India private banks were ahead in the credit card movement, which prompted the public sector banks to join the bandwagon.
In view of this many nationalized banks and smaller private banks issued cards to their account holders while private banks offered the facility to any one who was covered under their credit card issuance norms.
But now nationalized banks have slowed down in issuing the credit card. Nagammal Reddy, managing director, Tamilnad Mercantile Bank pointed out, "We have around 5,000 card holders. While we would like to double this number, we won't aggressively market our offering like private banks to meet our target". While the Indian Overseas Bank is thinking of completely withdrawing from the credit card business. A senior official from the bank said, "There has been some talk of withdrawing from this business altogether". According to senior bank official from the bank, "Till such time, we will run the business as it is and won't be aggressive in acquiring new customers". IOB is having around one lakh credit card holders who are also account holders with the bank.
However most of the banks are planning to increase their fee-based income through banassurance and third party product offerings such as mutual funds, rather than completely being dependent on interest income.
Bhargava stated, "It is likely that the (credit card) industry will witness the comeback of fees in some fashion. This will also benefit customers in controlling the amount of credit card debt they can sustain".
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