RBI new norms on card bills to bring relief for credit card holders

There are around thousands of credit card holders who have cleared their credit card dues but still their names are blacklisted in the bank’s central database due to which there names also exist on cibil defaulter list. The Reserve Bank of India (RBI) is formulating guidelines instructing the banks not to declare someone a defaulter if the person has settled his or her account with the bank after paying the negotiated amount.

Some of the card holders have got into negotiation with their banks and have paid some lump some amount but then also they are being treated as defaulter in the bank's records. Due to this their name displays in the defaulters list prepared by Credit Information Bureau of India Ltd (CIBIL), which depends on the information provided by banks for the purpose.

Thus most loans become off-limits for the 'blacklisted' person - be it a personal or house loan — from any bank or finance company. Due to this 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. A harassed customer Arvind Gupta (name changed), who is CEO of an IT company told, "The present practice is nothing short of blackmail of customers by banks".

He told recently he paid Rs 75,000 to clear his dues, which had previously been settled for 50% of the then outstanding amount — Rs 6,200 in 2001. It was compulsion for him to pay the amount because his home loan application was rejected by a bank as his name was in CIBIL's defaulter list.

An RBI spokesperson pointed out that central bank is aware of the matter and soon will provide an appropriate solution. CIBIL MD Arun Thukral said to solve this issue RBI held a series of meeting with banks and CIBIL. He told at present when a card holder gets into settlement with the bank, generally bank treats the rest of the amount as "written off".

In many cases, it has been observed that banks raise demand for a small left over amount, according to the customer which should not have been there at all. In many cases banks say they won’t charge the annual fees. For instance, In Arun Sharma (name changed), case who works for a big corporation, bank had raised bill of Rs 900 against his name and was told to settle dues by paying Rs 450 of the disputed bill.

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

This time 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 told he had paid Rs 500 but still he has not received certificate from the bank.