Having looked around a bit, I still think that the bank might continue to charge interest on the outstanding amount, write-off notwithstanding. See Anjoo Sharma v. HSBC Bank (Indiankanoon.org Link :: State Consumer Disputes Redressal Commission Link). Though on the facts of the case, the consumer dispute was held in favor of the complainant/consumer, I personally feel that the defence was not led or presented properly and there even sounds like a disconnect between the HSBC commercial and legal (insofar as it can be assumed from the Commission's decision). Be that as it may. See these relevant parts (quoted decision in italics, empahsis is mine):
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The opposite party bank resisted the case. While denying each and every allegation made in the complaint, however, it admitted that it had issued two credit cards
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The statements of account for the period from 6.1.2006 to 5.1.2007 show that in respect of one of the credit cards the outstanding balance was Rs. 1,95,241.62 against which it has received Rs. 1,87,996/- as on 8.1.2007. Thus the interest amount was not cleared. In respect of second card for the period from 10.11.2006 to 9.12.2006 outstanding balance was Rs. 2,18,342.59 as on 1.1.2007. The bank had received an amount of Rs. 10,000/- on 27.12.2006 and Rs. 2,08,343/- on 8.1.2007. Interest charges on the outstanding payments due on credit cards were levied only on the last date of billing. In the event any payments are made during the period, interest on the outstanding amounts would be charged to the date of payment and the same would be reflected in the subsequent statement.
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The bank while admitting the payments made by her towards credit cards, however contended that in respect of one of the credit cards the outstanding amount was Rs. 1,95,241.62 as against which, it has received Rs. 1,87,996/- as on 8.1.2007. She might have deposited the cheque on 5.1.2007 for payment of said amount but it was cleared on 8.1.2007. Therefore she was liable to pay interest component in the interregnum on the outstanding amount of Rs. 1,95,241.62 levied from 5.1.2007 to 8.2.2007 viz., Rs. 7,245/- This amount was not paid. Pertaining to the second credit card as against outstanding amount of Rs. 2,18,342.59 as on 9.12.2006 the complainant had paid Rs. 10,000/- on 27.12.2006 and Rs.2,08,343/- on 8.1.2007. She had failed to pay interest for the interregnum period. They informed the principal outstanding and not interest. In both the cases the effective date of payment could be reckoned from 8.1.2007.
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I think the Complaint turned on the fact that the bank had admitted having recieved the outstanding payment and having issued an dendorsement to that effect, albeit mistakenly as alleged.
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[A]dmittedly one Ms. Deepthi, Manager of the bank had acknowledged that the bank had received the amounts by way of cheques As on date outstanding vide Ex. A5 & A6 the date being 5.1.2007. As we have earlier pointed out the defence of the bank is that the complainant was liable to pay the amount together with interest till 8.1.2007 the day on which the amount was received and for the interregnum period interest would be charged and therefore till such payment was made, it cannot be assumed that the entire amount was paid. The complainant asserts that had this been the practice Ms. Deepthi, Manager could have informed the said fact or made an endorsement to that effect . Contrarily by positively mentioning As on date Outstanding would undoubtedly indicate that the entire amount was paid. The bank while admitting that their office had issued the certificate that there were no outstanding wanted to wriggle out by stating simply that it was a mistake on the part of the office. Having accepted the mistake that they are estopped from contending that the amounts due were not paid. The bank could have filed the affidavit of Ms. Deepthi to prove that it was not towards outstanding and some amount was still due. She would be in better position to explain as to the endorsement which completely exonerates the complainant from paying any of the amounts. Equally, when the complainant asserts that when she did not receive any communication with regard to cancellation of these cards, she met Mr. Kamalesh Rangan, Associate Vice-President, Customer Services & Personal Finance along with an advocate Mr. Ramana Rao, who stated that he had waived off the amount due to wrong calculation. The bank did not choose to file the affidavit of said Mr. Kamalesh Rangan to deny the said fact. Instead it had filed the affidavit of Mr. Srikanth Racha, Legal Officer who was admittedly not present at any of these transactions. He could not deny the facts that were alleged by the complainant. He was not aware of any of these transactions.
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The Competition Commission decision in Pravahan Mohanty v. HDFC Bank Ltd. may also be useful. The consumer (referred to as the informant under Competion Act) before the Director General, Competition Commission had charged the bank of having acted in abuse of dominant position. Relevant portion as under:
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The informant referred to Page 29 of the Cardmember Agreement where it is mentioned that interest and any other applicable charges shall continue to accrue on the Card Account until the outstanding balance of such Card Account was reduced to nil and this clause was operative even after the cancellation of the credit card by the bank.
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[B]anks have been advised vide our circular no. DBOD No.Dir BC.88/13.03.00/2009-10 dated April 09, 2010 ... It has also been stated in the Circular that ... If a credit card holder wanted to surrender his card then the bank should accept the surrender subject to settlement of the dues by the cardholder.
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In this case IP has alleged unfair, indeed unconscionable and illegal, conditions imposed in the Cardmember Agreement as well as unfair, indeed hugely excessive and legally untenable, price - which includes "interest", "finance charge", "service charge", "illegally collected "service tax" and interest thereon, non-refundable entrance fee and annual membership fee, cumulative interest on interest in the event of a single default - unilaterally imposed on the Cardmember.
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The question which arises as to why in the case of credit cards the interest is charged on daily basis.
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36. Therefore in pursuance of section 27 of the Act,
(i) the bank should cease and desist from carrying on business on the basis of the Cardmember agreement and the bank should not abuse its dominance with reference to its consumers.
(ii) the bank should not enforce the Cardmember agreement and should not recover from the informant than that what was due and should not charge any interest after the use of the card was stopped.
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After going though these two (rather prolix) decisions, I'd say that they give you a fair idea of what the bank's defence would be, if it comes to that. So far as Anjoo Sharma is concerned, I'd even go so far as to say it was a defensible stand on part of the bank. But it also gives a fair indication on how to approach the bank to safeguard yourself; it'd be a good idea to call for the latest statement from your bank and make a payment as soon as you receive it, maybe even NEFT, to avoid accuring of interest. What seems to have worked in favor of the complainant/consumer in Anjoo Sharma was the statement received, payment made and endorsement issued by the bank on the spot. I'm not sure if this can be done on any branch on Citibank (it'd would depend on the commercial practice which I'm not aware of; probably even best to call up the Citibank Customer Support and ask them if you can visit any branch of Citibank and receive a latest statement from any such branch and handover the payment cheque to said branch).
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