February 3, 2010
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News: RBI Scrutinized For Lack Of Awareness
Citizens of New Delhi are wondering who's really in charge of the country's credit card structure; the country's banking regulator or the credit card companies. The Reserve Bank of India (RBI), New Delhi's banking regulator, was recently questioned by S C Agrawal, an activist with Right To Information (RTI) about the activities of the country's banks. The activities have been reported as being especially burdensome as credit card companies have imposed "heavy penalties" and "extra-ordinary interest rates" on cardholders. Financial organizations in New Delhi have not been the first to be criticized for acting in an unfair and deceptive manner; banks and card companies in Canada, the UK, and the United States (US) are among those who have been attacked for such behavior. The US and Canada have already placed additional government regulations in place to curb the abusive practices.
The question asked was "Is RBI aware that banks are charging heavy penalties also in addition to extra-ordinary interest rate on credit card default payments?" Agrawal further stated that lenders are strategically mailing credit card statements out that would not allow sufficient time or cardholders to meet the due date and thereby incurring penalties on delinquent payments. In response to Agrawal's question, Thomas Mathew the Deputy General Manager of the Reserve Bank said “We do not have the information.” Not the answer some had hoped for but probably what Agrawal and other activists thought.
Agrawal didn't end there. He also asked if the RBI was aware of the credit card companies' methods of handling over-the-limit transactions. According to Agrawal, banks refrain from denying over-the-limit transactions purposely so that they can collect on heavy penalties. The RBI acknowledged that it did not have any knowledge of this practice as well. The RBI is more than just the India's central bank; its role is also to monitor the financial industry's activities. The bank has been criticized by many saying it has deliberately closed its eyes to unethical tactics of private banks. It is likely the bank will be hearing more from the RTI group.