Code to rein in credit card issuers soon

Unsolicited credit cards and phone calls from direct sales agents pushing credit card sales could be a thing of the past, if the Indian Banks' Association has its way.

The premier banks' body is working out a fair practice code to be followed by all credit card issuing banks.

It will submit the code to the Reserve Bank of India in February for approval. "We have met the card issuing banks, heard their point of view and have also taken stock of the business process they currently follow," said a senior IBA official.

IBA has also studied the fair practice code followed internationally. Based on the study and discussions with the banks, the two subgroups are preparing the draft code which should be ready by February, said the official.

The fair practice code will focus on improving code of conduct and transparency in card issuance, customer acquisition channels and customer grievance redressal, said a senior official from IBA. 

According to the draft fair practice code, banks would have to make complete disclosures on rates, fees and other charges and provide frequently asked questions document to the customer.

With regard to unsolicited cards, banks will not be authorised to charge the customer until he has communicated his acceptance of the terms and conditions of the card either verbally or in writing, said the official. 

In addition, banks would also have to educate the customer how to dispose off the card if they do not wish to accept it, he added.

To improve the customer acquisition channels, banks would have to ask their direct sales agents to maintain a do not call list and also check its validity regularly, check the frequency of calling per month, respect the privacy of the customer and identify hours and days of callings.

The subgroup has yet to evolve a code for DSAs to ensure privacy of customer information.

In accordance with the draft fair practice code, banks would also have to formulate a complaint handling process in place along with the attached response time.

Banks would also have to form a consumer mediation unit which will resolve dispute for customers who are unhappy with the outcome of their complaints, said the officials.

Concerned at the indiscriminate issuance of credit cards, the RBI on December 24 had urged the IBA and some large card issuing banks to evolve a code of conduct for card issuing banks.