RBI may Bring Relief for Credit Card Holders

RBI may Bring Relief for Credit Card Holders December 18, 2007 In an effort to make the credit card operations more transparent, RBI may make it compulsory for banks to repay the small credit balance to cardholders in case the card is left inactive for more than six months. The rule applies for cardholders who have a credit balance of Rs 100 or lower in the account. The RBI has observed that there has been various cases where the foreign and private sector banks stops sending the statement if the card is rendered inactive for six months. Thereafter the credit balance is written off to a suspense account and then transferred to the profit and loss account. The practice followed by PSU banks is to hold the account for eight years before writing off the account. Some major players in the credit card business have even altered their policy of writing off the credit balance in inactive credit card holders after being pulled up by the RBI in its recent inspection, according to Bankers. Bankers explained that even if these credit balances are of very small denomination, the amount becomes large after accumulation which is transferred to the profit and loss account. In fact, the RBI has asked most of the banks to inform it about the practice of managing the credit balance of the customer. It has also asked various banks to justify the practice of writing off small balance in the credit card. The RBI is of the opinion that card holder should be made aware of the credit balance and amount be returned if the cardholder validates that the card is no more valid in transaction.

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