Adhil Shetty | Dec 19, 2016 | Deccan Herald
If you’re applying for a loan or a credit card, your lender would look into your credit history. A CIBIL score of 750 or more is considered desirable by most lenders. If you’ve been prompt in repaying your credit card bills and other loans, you should have a sturdy score.
But every now and then, people get a rude shock with their CIBIL score which prevents them from getting a loan product of their choosing. This means that their loan application may get rejected, or they may be offered a loan with a high interest rate.
Your CIBIL score could be low for broadly two reasons — Data in your CIBIL report is incorrect, and that you have defaulted on a loan or have been irregular with your repayments.
The first step towards ascertaining the details of your CIBIL report is to get a copy of it. You can do this for a fee of Rs 550 from the CIBIL website. Your report will be generated instantly and its details will be shared with you on your email.
Now, let’s dive deeper into these two issues.
Incorrect reporting of personal and credit history
*Check personal details: Your CIBIL report carries your personal details such as name, PAN number, contact information, employer’s address, employer information such as salary and occupation.
Next, it carries details of every credit card account or loan account you’ve opened with regulated entities such as banks and NBFCs. Any discrepancy in this data needs to be checked and challenged. Ascertain that the details in your report pertain to you and your own credit history. If you’ve mistakenly been assigned someone else’s credit history — especially an adverse credit history — your credit score would suffer.
*Check repayment details: Next in your report, go through the details of all the borrowing accounts you’ve opened: Credit cards, personal loans, home loans, car loans, etc. You also need to check the monthly repayment details of all these accounts. The CIBIL report would reflect any delays in repayments (as ‘days past due’), defaults, settlements, write-offs, value of collaterals offered, etc. Ascertain that all the details are correct and that these accounts actually belong to you. This data is reported to CIBIL by your lender. If any detail has been reported in a way that adversely impacts your borrowing history, your credit score would suffer.
*Raise a complaint: CIBIL allows you to challenge incorrect reporting through its website. You can also contact them through post. When you access the online copy of your report, you can go over your personal and financial details. Any details that you want to be corrected need to be reported to CIBIL, which will then contact your lending institution for amends. This process may take up to 30-45 days. If the lender accepts the corrections, they will reflect in your report. If the lender refuses to accept your corrections, you will have to get in touch with them directly. This is because CIBIL prepares your report from information received from your lender. Therefore, CIBIL cannot directly change the contents of your report.
Defaults, Delays In Repayments, Credit-Hungriness
If you have neglected repaying your loans, it would hurt your credit score hard. Let’s take a quick look at your options to address this problem:
*Repay loan balances on time: Whether you have loans or credit card dues, always aim to settle them as per your repayment plan. If there are difficulties in repayment, always keep your lender in the loop so that the lending terms may be made easier. With credit cards, always pay the full due amount rather than the minimum amount.
*Don’t be credit-hungry: Don’t apply for too many loans or credit cards, especially within a short time. With application, the lender will check your credit history. Too many queries into your credit history would reduce your credit score since you will be seen as a credit-hungry person. Also, having too many loans at the same time means you will have to manage several EMIs every month, which would adversely impact your liquidity and could lead to default.
*Increase credit limit on card: Try and spend no more than 20% of your credit card limit. For example, if your monthly spending limit is Rs 1,00,000, restrict your spending to Rs 20,000. It means that your credit utilisation ratio (CUR) is 20%, which is ideal. A frequently high CUR would portray you as being in constant need of short-term credit.
Asking your credit card provider to increase your spending limit, or having multiple credit cards, can help reduce your CUR. For example, your increased spending limit could be Rs 2,00,000, whereas your monthly spending is Rs 20,000, thus bringing your CUR to 10%. Also, if you have multiple credit cards, you could divide your spending between them, thus maintaining an optimum CUR on all cards rather than increasing the CUR on a single card.
*Don’t settle: If you’ve defaulted on your payments, your lender may offer you an option to ‘settle’ your loan. This means paying a percent of your principal and interest due, and considering the loan account closed. Taking this option would reflect in your CIBIL history and it would adversely impact your credit score. Any lenders you approach would see that you were unable to repay your loan. Therefore, do not take the settlement option if you can settle loans in full.
*Repay a mix of credit: You should have a history of repaying a mix of short-term or unsecured credit such as credit card balances and long-term or secured credit such as home loan. The timely repayment of a mix of credit instruments would reflect well on your credit history.
(The writer is CEO at http://www.BankBazaar.com)
Creditvidya.com | Updated On: March 15, 2015 12:27 (IST) | NDTV Profit
If you are new to using credit cards or have been using one without knowing what a bunch of things mean on the credit card statement, let’s make things a little simpler for you. Let’s de-jargonise some credit card terms for you so that you can handle your credit responsibly and in turn help you keep up a good Cibil score.Many financial terms on your statement stand for basic things that are easy to understand. Here’s a closer look.
The credit limit is the maximum amount of money that you can swipe or borrow on your credit card. This is a prestipulated amount that is fixed by the card issuer. How much of the credit limit you utilise, also has a large bearing on your Cibil score. Ideally the utilisation rate on your card should not exceed 30 per cent of the total limit that has been allotted to you. If you display good credit behaviour your credit limit may be enhanced by the lender, but do not use it as an excuse to become reckless on your spend. Reckless spending may lead you to penalties and as has been noted in some cases, even account suspension by the bank.
The cash limit on your credit card should not be confused with the credit limit. The cash limit is the maximum amount of cash that you can withdraw from the ATM using your credit card. Issuers of credit cards often allow cardholders to obtain a maximum amount of cash with their cards where the cash limit is usually a per cent of the overall credit limit. This feature makes credit cards similar to bank debit cards. However, the striking difference between debit and credit cards cash withdrawal is that in the case of debit cards the cash belongs to you and is at your disposal whereas in case of credit cards, a very high rate of interest is applicable from the day the cash is withdrawn to the day it is repaid.Therefore, cash withdrawal through credit cards should be made only in emergency situations.
Annual percentage rate (APR):
The annual percentage rate (APR) is the interest rate charged on outstanding credit card balances outside the due date. APR is expressed in per cent per annum. A common misunderstanding about credit cards is that interest is charged on everything you swipe or borrow through your card. However, the truth is you will be charged for keeping an outstanding balance on your account over the interest-free grace period, which is usually 30-45 days from the payment due date (differs from bank to bank). So effectively if you pay the entire outstanding amount within the billing cycle, you will never have to pay interest on the money you use on credit.
The billing cycle is the time between the credit card bill statements. The billing cycle and credit card statement dates are confirmed to you at the time of the issue of your card by the card issuer. The due date remains the same each month. Since you already know the due date, it gives you the headroom to plan your credit in a smarter way and avoid making late payments.
Minimum amount due:
This is usually a small per cent (usually 2-5 per cent) of your total amount outstanding. This is the minimum amount a cardholder should pay within the pay-by date to keep the account from going into default.
The due date is the date by which you must make at least pay the ‘minimum amount due’ in the case where you are not able to pay your bill in full. Paying outside the due date will cost you late fee charges as well as get reported on your Cibil report as a negative mark. Some card issuers allow you to set your convenient date for card payment and others set a standard due date. For payments whose due dates fall on weekends or holidays, the due date would be the next business day.
Sometimes during online transactions, purchases may not go through for various reasons – including the transaction being non-compliant with the merchant account rules or a dispute by cardholders. In such cases, the amount charged previously on the credit card is credited back to the card holder through a reverse (credit) entry. This is called a charge-back.
Late payment fee:
A late payment fee is charged when you miss paying the minimum amount due by the payment due date. Late payments may affect your Cibil score negatively even if your entire outstanding balance is paid in full at a later date.
It is the process of moving outstanding credit card balance from one card issuer to another, usually from a high APR issuer to a low APR issuer in order to reduce the interest charges for the cardholder. However, balance transfer also involves payment of fees to the low APR issuer.
It refers to rewards program on your card that return to you (by crediting your card account) a percentage of the total amount spent on your credit card over a specific period of time. This feature can be beneficial only if you use your credit card regularly and pay the entire outstanding amount on your bills every month.
CVV (card verification value):
It is a 3 digit number printed on the back of the card. It stands for “card verification value” code and helps verify the legitimacy of a credit card. The CVV number is essential while making payments online. Since this is sensitive information you must never reveal this number to anyone including your Financial Planner to the customer care executive at the bank.
These cards use computer chips to store and process information instead of, or in addition to a magnetic stripe. A personal identification number (PIN) is required at the point of sale for the card payment to go through.Similar to CVV, this is also classified information that you should not be share with anyone.
Once you have these jargons demystified, it will be easier for you to understand how your credit card works and thus plan to make repayments accordingly.
Disclaimer: All information in this article has been provided by Creditvidya.com and NDTV Profit is not responsible for the accuracy and completeness of the same.
Source : http://goo.gl/3FrGf8
TNN | Jan 23, 2015, 02.32AM IST | Times of India
The significance of this fact sheet is that it will make it possible for borrowers to compare loans from two lenders. Also, by making the charges a part of the contract, the central bank has reduced leeway for lenders to vary pre-payment charges subsequently.
MUMBAI: Borrowers availing home, auto and personal loans can now be assured of a fair deal with the Reserve Bank of India (RBI) making it compulsory for banks to set out every possible cost in respect of the loan in a fact sheet at the processing stage. Banks will also have to publish the ‘annual percentage rate’ representing the total cost of credit to an individual borrower. Besides, they will have to display on their website the interest rate range for various contracted loans for the past quarter for different categories of advances.
The fact sheet drafted by the central bank requires lenders to spell out the interest rate, the spread above the benchmark rate, date of reset of floating rates, mode of communication of interest rate changes, all fees payable, refundable fees, charges for conversion from floating to fixed rate loan and penalty for delayed payments.
The significance of this fact sheet is that it will make it possible for borrowers to compare loans from two lenders. Also, by making the charges a part of the contract, the central bank has reduced leeway for lenders to vary pre-payment charges subsequently.
Today, an objective comparison is difficult because terms differ vastly. For instance, some of the personal loans have deleterious charges for pre-payment in the first year. Asking banks to disclose an annual percentage rate representing the total cost of credit ensures that customers are not taken in by deceptively low rates with a step-up structure. At the same time, it does not take away the ability of banks to innovate in product design.
The new norms on transparency follow the central bank’s revised guidelines for calculating the benchmark base rate to ensure that changes in interest rates are passed on to all borrowers fairly. The new norms are based on recommendations by a working group on cost of the pricing of credit. The committee – which had submitted its report a few months ago – had said that despite efforts via policy to usher in transparency and fairness to the credit-pricing framework, there have been certain concerns from the customer service perspective. These mainly relate to the downward stickiness of the interest rates, discriminatory treatment of old borrowers vis-a-vis new borrowers, and arbitrary changes in spreads.
One of the major recommendations by the committee was that the Indian Banks’ Association should develop a new benchmark for floating interest rate products, namely, the Indian Banks’ Base Rate, or IBBR. It had also proposed a penalty for banks that refuse or delay transfer of loan for refinance. RBI is yet to take a stand on these two recommendations.
Source : http://goo.gl/8acJlp
Bindisha Sarang, ET Bureau Dec 29, 2014, 08.00AM IST | Economic Times
The banking space was a mixed bag for retail customers in 2014. Interest rates remained decidedly high during the year, delighting depositors but dismaying borrowers. HDFC reduced its home loan rates by a marginal 15 basis points.
There was some relief for home loan customers in the Budget. The deduction limit for home loan interest was raised from Rs 1.5 lakh to Rs 2 lakh a year. But this won’t offer any benefit if your loan is less than Rs 15 lakh because the interest will not be more than Rs 1.5 lakh a year.
The RBI introduced several customer-friendly measures during 2014 and even took up cudgels on behalf of the aam admi by laying down a charter of rights. But all these got balanced by a new rule that allows banks to charge for ATM usage beyond five times a month.
Other banks’ ATM can be used for free only three times in a month. After that, transactions will be charged Rs 20. SBI, Axis Bank and HDFC Bank have already started charging customers for usage beyond the free transactions. However, in response to a PIL, the Delhi High Court has asked the RBI to explain why customers should be made to pay for taking out money from their own bank’s ATM.
Financial inclusion at 10
Another major change was the RBI’s nod to allow children above 10 to operate their bank accounts independently. Kids are permitted to use facilities like ATM and cheque books.
The objective is to familiarize children with banking procedures but many parents are skeptical about letting children handle money so early.
Rate cut seems imminent, but…
Though most analysts expect the RBI to cut rates in 2015, it is not clear if this will happen in the next couple of months. Till that happens, make best use of the high deposit rates offered by banks. If you do not have a large sum to invest in a fixed deposit, use recurring deposits to lock in to the high rates.
Bank deposits are not as tax efficient as debt funds, but the 2014 budget levelled some portions of the playing field. If the investment horizon is less than three years, there will be no difference in the tax.
Also, if you plan to take a home loan in 2015, opt for a floating rate loan. Given the imminent cut in rates, a fixed rate home loan will not be a good idea. Customer friendly steps by the RBI in 2014:
KYC norms eased
Customers may submit only one proof of address when opening a bank account or during periodic updation.
Banks not to charge foreclosure charges on floating rate loans.
Minimum balance in savings accounts
Instead of penal charges for not maintaining minimum balance, banks should limit services available on such accounts.
Minimum balance in dormant accounts
Banks not to levy penal charges for non-maintenance of minimum balance in any inoperative account.
Banking for minors
Minors above the age of 10 allowed to open and operate savings bank accounts independently.
SMS alert charges
Banks told to charge customers only on the basis of actual usage.
Source : http://goo.gl/8oiRHw
Creditvidya.com | Updated On: January 04, 2015 15:12 (IST) | NDTV Profit
Imagine this: You go down to our local grocery store to pick up a packet of milk on your way back home from work, and when you dip your hand into your handbag you find your wallet missing!
Now, you are breaking out in cold sweat because you have lost all your credit/debit card(s) as well as your PAN card. Panicking at times like these is natural, but good news is you can go about cancelling all your cards and retrieving them in a short span of time. The money in the wallet, however, is gone for good.
If you find your wallet missing, first things first, don’t panic as it’s not the end of the world. You may have lost the money, but you can still still straighten it out. Read on to know about a step-by-step process to check, cancel and replace all the contents of your wallet (except money!).
1. Cancel all your cards immediately
It matters little whether your card issuer is a public sector bank or a private sector bank, because you have to cancel all your cards at once as soon as you can. Calm down and make a list of the banks that you hold cards of. If you do not have their customer service numbers handy, go to their websites and find out the numbers one by one. Once you are sure you have the contacts numbers of cards issuers jotted down, it’s time to start making the calls.
When you call them, mention/ask the following things clearly:
That you have lost your wallet and your card was in it
The date and approximate time of the incident
Ask if any transactions have appeared on your card ever since
Tell them to cancel your card immediately and apply for replacement
2. Wallet protection plans
The procedure mentioned above is the first thing you need to do if your wallet has gone missing, but needless to say, this is a time taking procedure that will take up at least half a working day if you have four or five cards. In the day and age that we live in today, you obviously would not like to spend a lot of time calling up your card issuers. A solution to this problem has been brought forth by service providers such as One Assist and CPP India which provide comprehensive assistance in the event of card loss.
In order to avail of such services, you need to be registered with them and pay them an annual subscription fee that may be around Rs 1,500-2,000 per annum.
In the event of card loss or theft, all you need to do is make a call to your wallet protection service provider and it will take care of blocking your cards on your behalf to prevent misuse. In case you find yourself in such a situation while travelling, they could even help you in settling your hotel bills and arranging a return ticket for getting back home. You would not have to worry about the replacement your PAN card or driving licence either as they go through the documentation required to replace the same for you even free of cost. While it is good to be optimistic and wish that your wallet will never get stolen, it is a good idea to sign up for such wallet protection plans. For a small sum of money you will be required to pay annually, you can be saved of a lot of hassle if you do happen to lose your wallet.
3. List out all your subscription services
These days, if you are an active netizen, chances are that you use your credit cards for a host of online services. It’s a good practice to maintain an excel sheet of all your online subscriptions generally, and in the event of the loss of your credit cards, this list will seem like a boon. You still have to take the trouble of notifying these service providers though and may lose out on a subscription or two till you update the information about your new card.
4. Check your Cibil report
Even after you have cancelled all your active credit cards, it may be a good idea to pull out your Cibil report after 30 days of the date on which you lost your card. Once you receive this report, comb through it for any suspicious transactions or enquiries for loans or credit cards that you have not applied for after the incident. If you find anything at all that seems like a fraudulent transaction, notify both the concerned card issuer or lender and Cibil about it immediately.
Going through these steps are by no stretch of imagination fun things to do, but if you do happen to lose your wallet, they may come in handy and reduce your stress.
Disclaimer: All information in this article has been provided by Creditvidya.com and NDTV Profit is not responsible for the accuracy and completeness of the same.
Source : http://goo.gl/Kw7OoS
29 Dec, 2014 | Times of India
The Charter of Customers’ Rights released by the RBI lays down five basic things that you enjoy as a bank customer. You can file a complaint if these are violated.
Right to fair treatment
This right prohibits banks from discriminating against customers on grounds of gender, age, religion, caste and physical ability.Banks can, however, continue to offer differential rates of interest or products to customers. The financial services provider may have certain products which are designed for members of a target group or may use defensible, commercially acceptable economic rationale for discriminating between customers, the central bank says.
Right to transparency, fair and honest dealing
You can expect language in bank documents to be simplified and transparent. The charter requires banks to ensure that all contracts are easily understood by the common person. The onus of sending out effective communication about products will rest with banks. Information on the product, price, customer responsibilities and key risks will have to be clearly stated. Important terms and conditions should be clearly brought to the notice of the customer, the charter states.
Right to suitability
Despite several regulations, complaints related to mis-selling continue to plague the distribution space. Lured by higher commissions, sales officials tend to push products without ascertaining their suitability for the customer.With this charter coming into force, such officials might find it difficult to palm off say market-linked insurance products to senior citizens. The charter has made it mandatory for banks to sell products after keeping in mind customers’ needs, financial circumstances and understanding.
Right to privacy
Banks are duty-bound to keep customers information confidential. Customers have the right to protection from all kinds of communications which infringe upon their privacy, the charter states. Banks cannot pass on your details to telemarketing companies or for cross-selling. ‘There have been instances where bank officials have asked customers to route their investments through them (banks act as distributors for mutual funds and insurance firms).This is unethical’, says Roongta.
Right to grievance redressal and compensation
The charter makes banks accountable for their own products as well as those of third parties like insurance companies and fund houses. They will no longer be able to wash their hands of the responsibility once the product is sold. Banks will have to communicate the policy for compensating for mistakes on their part, lapses in conduct and non-performance or delays.The redressal and compensation policy will have to state the rights of customers.
Source : http://goo.gl/D5YUXM
TNN | Nov 21, 2014, 01.44AM IST | Times of India
MUMBAI: The Reserve Bank of India (RBI) has placed curbs on the charges imposed by banks for not maintaining minimum balance requirements. The new norms require banks to notify the customer by SMS, email or letter about the intention to apply penal charges if minimum balance is not restored within a month. Banks have also been barred from the practice of having negative balances in accounts due to imposition of penal charges.
Under the new norms, the board of directors of a bank has to approve the penal charges proposed to be levied for non-maintenance of minimum balance. “The penal charges should be directly proportionate to the extent of shortfall observed. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalized,” RBI said in a circular to all banks.
Although the board of directors has been given the freedom to fix charges, RBI has said that penal charges must be reasonable and not out of line with the average cost of providing the services. The new charges come into effect from April 2015. Until then, banks have been asked to update their customer’s mobile number and email details.
Earlier, RBI had proposed that banks should not take undue advantage of customer difficulty or inattention and instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level. However, following a representation by banks, the RBI has revised its approach.
Source : http://goo.gl/XhgZIG
Mayur Shetty, TNN | Oct 28, 2014, 04.56AM IST | Time of India
A study by IIT-Bombay has highlighted how such cash handling charges are hurting the underprivileged who work away from their permanent place of residence.
MUMBAI : Charges for bank transactions outside the home branch are a relic of the pre-core banking system (CBS) days. Yet, banks are continuing with this legacy using a loophole in a Reserve Bank of India (RBI) circular and imposing charges under the head of ‘handling charges’ for cash deposits although it makes no difference to the bank where the transaction is being conducted.
A study by IIT-Bombay has highlighted how such cash handling charges are hurting the underprivileged who work away from their permanent place of residence. “Instead of harnessing the potential of the core banking system, banks are misusing the system with unjustified charges,” said Ashish Das, professor of statistics at IIT-Bombay, who has conducted the study.
The study shows that while several banks discriminate in the way they treat home branch and non-home branch transactions, there is no uniformity in the practice.
HDFC Bank, for example, allows one free transaction up to Rs 49,999 per day at a non-home bank branch as long as the money is deposited by the accountholder himself. But if it is a third party, including a family member, there is a charge of Rs 100.
ICICI Bank allows one cash deposit transaction in a month by either the customer or his representative in a non-home branch. Beyond that, deposits at non-home branch accounts are charged Rs 5 per thousand rupees.
State Bank of India has recently capped the number of free transactions to five in a month, beyond that there will be a charge of Rs 50 per transaction. The bank however does not place any restrictions on use of cash deposit machines (CDMs). Punjab National Bank, on the other hand, places restrictions on the number of transactions that can be done in a non-home branch. It also differentiates between deposits made in a cash deposit machine within the home branch and those outside the branch. Outstation deposits are charged at the rate of Rs 2 per Rs 1,000 or part of it.
The report, titled A Myth Called ‘Any-Branch Banking’, recommends that RBI end the disparity in charges for cash transactions at home branches and non-home branches. It also calls upon RBI to popularize cash deposit machines. To popularize the use of these machines, the report recommends that the National Payments Corporation of India take up the feature of reverse debit (cash deposit) under its interoperable debit card platform. This will allow account holders to make deposits in any machine. “With the envisaged increase in CDMs in the country, it is the right time to work towards making the CDMs interoperable,” the report said.
In its circular issued in July last year the RBI had said, “To ensure that bank customers are treated fairly and reasonably without any discrimination and in a transparent manner at all branches of banks/service delivery locations under CBS environment, banks are advised to follow a uniform, fair and transparent pricing policy and not discriminate between their customers at home branch and non-home branches.” However, the circular also clarified that cash handling charges may not be included under intersol (interbank) charges.
Following the introduction of core banking systems, details of account holders are maintained in central servers and can be accessed through any branch across the country.
Source : http://goo.gl/d6Qxuz
HT Correspondent | Hindustan Times Chandigarh, September 29, 2014 | Last Updated: 23:39 IST(29/9/2014)
The District Consumer Disputes Redresssal Forum, Chandigarh, on Monday directed HDFC bank to pay Rs. 25,000 as compensation for deficient services.
In a complaint, Dinesh Batta, a resident of Sector 19, said he had an account with the HDFC bank and was operating a credit card issued by the bank.
He said in June 2013, an unauthorised transaction of Rs. 72,487 was performed using his credit card, following which he informed the bank.
Batta alleged that despite assurance of investigations into the case, no action was taken by the bank. After three months, when he contacted the bank to know the status of the investigation into his complaint, the bank had said his dispute form had been misplaced.
Denying any deficiency of services, HDFC Bank said the transaction was performed by an authorised person.
The bank said it was the duty of the complainant to take sufficient care that the card was not misused.The forum, presided over by PL Ahuja, said on September 24 that “the bank has not produced any copy of the detailed investigation allegedly made by them, in accordance with which, the bank reached at a finding that the disputed transaction was conducted by an authorised person. We are of the view that the omission on the part of bank to take prompt action on the card holder dispute form of the complainant and providing him the information and non-production of its investigation report point out the deficiency in service on the part of bank.”
The forum also directed the bank to pay Rs. 7,500 as litigation charges.
Source : http://goo.gl/wn4Uag
LN REVATHY | COIMBATORE, SEPT 12, 2014 | Hindu Business LIne
Technology seems both a boon and bane in banking. While customers are able to do their banking transactions 24×7, from the comfort of their home, anytime and anywhere, people also seem to be losing money because of technology, observed U Chiranjeevi, Banking Ombudsman, RBI, Chennai.
Speaking to Business Line on the sidelines of the Coimbatore edition of Reserve Bank of India Quiz (RBIQ), he said that the number of complaints pertaining to credit and ATM cards are on the rise.
”But 23 per cent of the complaints are not maintainable. People are not aware of the scheme,” he said and explained that the Banking Ombudsman office does not entertain complaints received through an advocate, forgery and frauds such as phishing attack or ending with other forums such as the Debt Recovery Tribunal (DRT) and commercial transactions.”
”The complaint should be between the bank and the customer. And here too, we can take up the issue only if it is within this jurisdiction. For instance, if the complaint pertains to credit card transaction and the card holder’s billing address is elsewhere (some other state), then I cannot take the complaint. It has to be taken up in that geography,” Mr Chiranjeevi explained.
‘The Banking Ombudsman scheme should be strengthened; with customer protection gaining strength, there is pressure for expanding the scheme to other areas such as cooperative and regional rural banks as well,” he said.
The Ombudsman office though is facing manpower shortage. The staff strength according to Mr Chiranjeevi, has not been adequate to take care of the increasing number of complaints.
The office received 9,500 complaints last year, which is said to be 21 per cent higher than the numbers received the earlier fiscal.
With expanding branch network, financial inclusion initiatives and entry of new banks, the number of customer complaints is expected to go up.
The Banking Ombudsman however conceded that they have an institutional mechanism to resolve issues at the earliest. ”No complaint remains unresolved for more than 30 days,” he said.
Of the total, nearly 25 per cent are ATM-related complaints. Other issues that are causing lots of social problems pertain to loss of title deeds, auction of jewellery without notice and hidden charges, he said.
Though State Bank of India topped in the number of complaints followed by Indian Overseas Bank, Indian Bank and Standard Chartered Bank, Mr Chiranjeevi said ”just because the number of complaints is high, it is not negative. They have a huge network, customer base is large and are expanding. That these banks too are able to resolve the issues within the stipulated time should be appreciated.”
Source : http://goo.gl/wvRovd
Integra’s Take: You must first follow the published grievance procedure of your Bank, use the escalation matrix given by them and wait for their response to it before escalating the matter to Banking Ombudsman for effective complaint resolution.
PTI | Sep 14, 2014, 12.29PM IST | Economic Times
NEW DELHI: As part of its ‘go-green’ initiative, HDFC Bank has started sending PIN, unique code number, for debit card holders through SMS instead of the practice of sending it by post.
It is not just environment friendly but also convenient and saves time of both customers and the bank, HDFC Bank Senior Vice President and business head (Cards Payment Products) Parag Rao said.
“With the launch of the Green PIN we offer our customers the flexibility to generate a new pin number at a time and location most convenient to them, while simultaneously giving them the opportunity to take a step to save our planet’s vital natural resources,” he said.
Green PIN is One Time Password sent to the customer’s mobile number registered with bank. Using the OTP, customer can set debit card PIN at the bank’s ATM, Rao said. Customers will get OTP within 48 hours of applying for it.
HDFC Bank has nearly 1.75 crore debit card holders and about 16.5 lakh cards on an average is issued annually by the bank.
This facility is for all states except for Jammu and Kashmir due to restrictions on bulk SMS delivery for the state, Rao said.
The green PIN is one of many ‘go green’ initiatives of HDFC Bank, he said.
Source : http://goo.gl/KVUAHX
R. RAMABHADRAN PILLAI | July 14, 2014 11:58 IST | THE HINDU
Once the security issue is taken up in all earnestness, compelling banks to adhere to strict security measures, the cost of operation of the ATMs is bound to go up.
A move by certain banking channels to impose charges on savings bank account holders of banks on transactions done through ATMs of other banks, has not received the nod of the authorities concerned.
Groups of ATM operators in the private sector are understood to be behind the move to levy charges on every transaction made on ATMs belonging to other banks.
At present, five transactions performed through ATMs of other banks such as balance enquiry and changing of secret identification number are free of charge in a calendar month. The charges levied on the transactions from other ATMs differ with each bank, generally in the range of Rs.10-20 for cash withdrawal and Rs.5-Rs.10 for balance enquiry.
The arrival of white label ATMs, set up by private companies, had changed the scenario with the new players seeking to operate the machines profitably. The number of footfalls is important for the white label ATMs as the concerned bank pay the service charges to the former on the basis of the transactions. The issue is understood to have been discussed by the banks with Indian Banks Association, but no decision has been taken on the issue, according to banking sources.
The cost of maintenance of the ATMs had gone up after the incident in Karnataka in which a woman was attacked at an ATM. The banks were asked to spruce up security by ensuring that the shutters should not be closed and there should be security guards to man the ATMs on a 24-hour basis.
The specification on security has not been made a rule by the banking authorities due to various reasons. Once the security issue is taken up in all earnestness, compelling banks to adhere to strict security measures, the cost of operation of the ATMs is bound to go up.
Significantly, RBI had pointed out in a circular concerning the ATM operation earlier that in countries such as U.K., Germany, and France, bank customers have access to all ATMs in the country, free of charge except when cash is withdrawn from white label ATMs or ATMs managed by non-bank entities.
“The ideal situation is that a customer should be able to access any ATM installed in the country free of charge through an equitable cooperative initiative by banks,” it said.
Source : http://goo.gl/AMIshB
K. C. GOPAKUMAR | July 14, 2014 11:55 IST | THE HINDU
A consumer forum here has held that collection of foreclosure charges from housing loan borrowers amounts not only to deficiency in service but also unfair trade practice.
The Ernakulam Consumer Disputes Redressal Forum headed by its president, A. Rajesh, made the ruling while directing Federal Bank to refund the foreclosure charges collected from Biju Joseph of Kakkanad, a borrower.
The forum said the Committee on Customer Service in Banks had opined that foreclosure charge levied by banks on prepayment of home loans was seen as a restrictive practice, deterring borrowers from switching over to cheaper available source. The committee was of the view that levying of foreclosure charges amounted to restrictive practice on the part of banks. The Reserve Bank, through a circular in 2012, had asked banks not to charge foreclosure charges/prepayment penalties on home loans on floating interest rate basis with immediate effect.
Need for uniformity
Though many banks had in the recent past voluntarily abolished prepayment penalties on floating rate home loans, there was a need to ensure uniformity across the banking system, the circular said.
According to the complainant, while executing the loan agreement, the bank had specifically stated that it would not charge any amount at the time of foreclosure of loan account. However, the bank had vehemently argued that it was entitled to levy prepayment charges.
The forum pointed out that the person taking loan had no other go but to sign on the dotted line.
The levying of pre-closure charges contending that it was a condition in the agreement was not at all justifiable, it said. The above condition in the loan agreement “cannot be said to be with the consent of the complainant.”
Source : http://goo.gl/s7Qbjq
The late fee imposed by card issuers ranges between Rs 100 and Rs 700, depending on the outstanding amount.
Mayur Shetty, TNN | Jun 14, 2014, 04.03AM IST | Times of India
MUMBAI: In a move that will bring relief to credit card holders, RBI has told banks that they can charge late fees only in the next billing cycle following a missed payment. At present, card issuing banks charge a late fee for any payment made after the due date.
The late fee imposed by card issuers ranges between Rs 100 and Rs 700, depending on the outstanding amount. For amounts above Rs 20,000, most banks charge a late fee of between Rs 600 and Rs 700. Most utility providers like electricity and telecom companies charge customers if they miss the due date. However, in the case of credit card payment the issuers charge interest for the delayed payment and in addition to this they charge a late fee payment.
This had led to a lot of heartburn among customers as they ended up paying both late fee and the interest even if they made the payment before the next bill was due.
Speaking to TOI, Pallav Mohapatra, CEO of SBI Cards, confirmed that RBI has asked banks not to impose late payment charges if the cardholder had paid before the next billing but after the due date. “It is possible that the regulator must have felt that since the cardholder is not being considered a delinquent until the next bill is unpaid, the penalty should not be charged,” he added when asked about the rationale.
In December 2013, RBI had directed banks’ credit card accounts to be treated as delinquent (a non-performing asset) only if the minimum amount due, as mentioned in the statement, is not paid fully within 90 days from the next statement date. The gap between two statements should not be more than a month.
Before that, some banks took the due date specified in the statement for payment of minimum amount due to determine the overdue status while others used the subsequent billing date to determine the over-due status.
Source : http://goo.gl/sFhE2d
Aparna Ramalingam, TNN | Jun 3, 2014, 02.06AM IST | Times of India
CHENNAI: A recent survey on home loan in South India has revealed that 47% of the respondents have expressed delay of more than seven days for availing the loan from the bank. Moreover, 80% of the respondents have expressed that banks or home finance companies were asking for information in a piecemeal manner; after the loan application was submitted. The survey was conducted across the four southern states and across metro, urban, semi urban and rural areas by CONCERT (Consumers Association of India) under a grant from the Department of Consumer Affairs, Government of India.
Among other things, the parameters compared were processing charges, penal interest for delay in payment of installments and foreclosure charges for early closure of loan account. The banks and housing finance companies were clubbed into four categories; public sector banks, private sector banks, old generation private sector banks and housing finance companies.
Not only that. Of the 2,316 survey respondents, 609 (27%) said the bank or home finance company insisted on a opening of a deposit account and other investment products, 524 (23%) respondents said these institutions insisted on opening of a deposit account and investment in a life insurance scheme.
Also, 860 complaints related to public sector and private banks put together in terms of loan sanction but delay in disbursement. Around 555 complaints related to public and private sector banks together in terms of interest rate increase but no communication.
On their part, banks maintain retail lending is a priority for them. “Our turnaround time for retail loans is less than seven days. We have dedicated retail process centres across all major metros,” C VR Rajendran, chairman and managing director, Andhra Bank said.
Some officials state that the reason for customer complaints when it comes to loan sanction but not disbursal is outsourcing of the same by some institutions. “The problem is when aspects like valuation of property are outsourced to other agency. This results in delay in loan disbursal. In our case, everything is done in house,” Rajesh Makkar, president, DHFL said.
Some officials from home finance companies are of the view that home loan is one of the many product avenues for banks and sometimes there may be slippages in service on that account. “For public sector banks, home loan is one of their many businesses but for us that is the only business so we go into every detail from sanction to confirmation letter and interest rate revision,” a senior official from a home finance company said who did not wish to be identified.
“Even though our interest rates on home loans are currently 10-15 basis points higher than those offered by some large nationalized banks, our efficiency and experience stands as our differentiator. After all, home loan is a fairly long product (15 to 20 years),” said another official from a home finance company., when apprised about the findings of the CONCERT survey.
Source : http://goo.gl/gAocpI
ENS Economic Bureau : New Delhi, Sat May 04 2013, 02:42 hrs | Indian Express |
The Reserve Bank has asked banks to stop differentiating between home-branch and non-home branch for customers, and ensure rates of interest for auto and home loans must not vary between customers without a clear reason.
RBI told banks that variation in pricing for services makes no sense when all of them are connected by a common network. But it has also put riders on gold loans, prohibiting advances against more than 50-gram coins from now.
The set of customer-friendly measures also include a promise to expand non-bank ATMs in rural and semi-urban areas.
Bank customers should be treated “fairly and reasonably”, the RBI has noted, without any discrimination. It has also rapped banks for the observed wide variations in the rate of interest charged to retail borrowers even when such loan is sanctioned on the same day.
“The very wide variation in rates of interest charged by banks on retail loans to different borrowers on the same day cannot possibly be attributed to customers’ risk profiles,” it said, asking banks to take remedial action. Lenders should have management oversight on such practices and should also frame policies to ensure that retail loan pricing is “transparent, realistic, and related to the risk perception of the borrowers,” the RBI said.
Reserve Bank of India Governor D Subbarao has also asked the Indian Banks Association (IBA) to work out a plan to implement the M Damodaran committee recommendations made to improve customer services in banks.
The recommendations include benchmarking of service charges for basic banking services, zero liability for ATM/point-of-sale/internet banking transactions and doing away with differential interest rates for new and old customers. It may be noted that the Damodaran panel report had in August 2011 made as many as 101 recommendations to improve customer service at banks and the regulator has already implemented a score of them. With agencies