April 28, 2005, New Delhi, Press Release
Reserve Bank’s working group on plastic money has failed to address even a single grievance of the millions of credit card users in the country, reacted Pradeep S. Mehta, Secretary General of Consumer Unity and Trust Society (CUTS) to the reports appeared in a section of the press.
A member of the group was quoted in the reports that it was decided to allow flexibility in service charges levied by different credit card issuers. It is grossly unfair as the average interest rate on outstanding credit is a shocking 2 to 2.5 per cent amount to over 30per cent annum when compounded. In most of the countries it is much less that that. The flexibility recommendation has allowed credit card companies to fleece the gullible customers, according to CUTS.
Interest rate apart, credit card companies never disclose hidden charges which is mandatory in the Truth in Lending Act (TILA) in the United States. Not only hidden charges appear in fine print in application forms but even the various penalties are thrown at the time of the recovery. Lastly, there is a gross highhandedness in the recovery process where the borrowers are harassed and persecuted. All these issues must have been settled to the advantage of the consumers, opined Mehta.
In fact the group has deflected the ball back in the court of the RBI by suggesting that the central bank should take into account all these grievances in the next credit policy.
The working group was set up last year to regulate the credit card industry which it has miserably failed presumably under the pressure of the banks issuing these cards. (CUTS-NF)