RBI restrains banks from issuing unsolicited credit cardsJuly 24th, 2008 - 8:02 pm ICT by IANS
Mumbai, July 24 (IANS) The Reserve Bank of India (RBI) has instructed all commercial banks to refrain from issuing unsolicited credit cards and activating them without seeking the customer’s consent. In a notification issued here Thursday, the RBI has made it very clear to banks that those who issue unsolicited credit cards, activate them and subsequently bill them will not only “have to reverse the charges forthwith, but will also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed.”
The notification also empowers the person in whose name the card is issued to approach the banking ombudsman “who would determine the amount of compensation payable by the bank to the recipient of the unsolicited credit card as per the provisions of the Banking Ombudsman Scheme, 2006, i.e for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him.”
In instances where unsolicited credit cards issued have been misused before reaching the person in whose name the card was issued, the central bank has made it clear that the card issuing bank will be held responsible for any loss arising out of misuse of such cards.
On the issue of insurance cover offered to credit card holders through tie-ups with insurance companies, the banks will henceforth have to obtain in writing from the credit card holder the details of the nominee for the insurance cover with regard to accidental death and disablement benefits, the notification said.
The banks will also have to ensure that the relevant nomination details are recorded by the insurance company and issue a letter to the credit card holder indicating the details regarding the name, address and telephone number of the insurance company which will handle the claims relating to the insurance cover.
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