IN THE HIGH COURT OF JUDICATURE AT MADRAS
(Special Original Jurisdiction)
W.P. No. 26869 of 2007
Centre for Social and Economic Justice,
Rep. by its Managing Trustee,
P. Sundararajan,
571/2-H, Anna Salai,
Teynampet, Chennai – 600 018
...Petitioner
Vs.
1. Union of India
Rep. by The Director of Public Grievances,
Ministry of Finance,
Department of Economic Affairs,
Banking Division,
Jeevan Deep Building,
Parliament Street,
New Delhi-1.
2. The Governor,
Reserve Bank of India,
Central Office,
Mumbai - 400 001.
3. The President,
Indian
Banks' Association,
World Trade Centre, 6th Floor,
Centre 1 Building,
World Trade Centre Complex,
Cuff Parade,
Mumbai - 400 005.
4. Managing Director,
ABN AMRO Bank,
9th Floor, Tower C,
Cyber Greens,
DLF Cyber City,
Sector 25A,
Gurgaon – 122002.
5. Managing Director,
American Express Bank Ltd.,
A,A1,A2 Enkay Centre,
Udyog Vihar Phase V,
Gurgaon,
Haryana - 122016, India.
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6. Managing Director,
Citibank N A,
Shakti
Towers,
766 Anna
Salai Post Office,
Chennai –
600002.
7. Managing Director,
ICICI Bank Ltd,
Landmark Race Course Circle,
Vadodara-39 0007.
8. Managing Director,
Standard Chartered Bank,
90 Mahatma Gandhi Road,
Mumbai 400 001
9. Managing Director,
State Bank of India
State Bank Bhawan, IV floor
Nariman Point, Mumbai 400021
10. Managing Director,
The Hongkong & Shanghai
Banking Corporation Ltd.
52/60, M.G. Road,
Fort,
Mumbai – 400 001
11. Managing Director,
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel, (West)
Mumbai- 400 013.
…Respondents
AFFIDAVIT OF P. SUNDARARAJAN
I, P. Sundararajan, Managing Trustee, of the Petitioner Trust, having Registered Office at 571/2-H, Anna Salai, Teynampet, Chennai – 600 018 and the functional office at No. 1-P, Pandu Klix Plaza, 168/330 Thambu Chetty Street, Chennai- 600 001, do hereby solemnly affirm and sincerely state as follows.
1. The Petitioner is a Charitable Trust registered under the Indian Trusts Act, bearing registration No. 1460/2006. The Trust works for the Social and Economic Justice enshrined in the Constitutional Law of India
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2. This Writ Petition is filed in general interest of the public seeking appropriate directions to the respondents to implement the guidelines provided in the Master Circular on Credit Card Operations of banks (RBI/2007-08/32 DBOD.FSD.BC. 17/ 24.01.011 /2007-08) issued by the Reserve Bank of India to regulate the Credit Card Operations and protect the welfare of the citizens, which is a mandatory obligation for the Credit Card issuing banks and Non-Banking Financial Companies.
3. The Centre for Social and Economic Justice creates inter alia awareness among credit cards holders through our website: www.CreditCardWatch.org and other methods such as conducting public discourses, and disseminating information through the print and electronic media.
4. Such interaction has disclosed that most of the problems begin with the customers’ ignorance of the Credit Card rules and regulations. In our experience we have learnt that many of the Credit Card users in Tamil Nadu were not accustomed to Internet usage and understanding English Brochures.
5. During our research to chalk out ways to solve the problems of common citizen, we learnt that the Reserve Bank of India, being the regulating authority for all banks and non banking financial Corporations has been working consistently for the development of banking system as well as the protection of customers/consumers. In this way the RBI laid many guidelines to regulate the Credit Card operations also. On 1st July 2006, the RBI has consolidated its various guidelines on Credit Card Operations into one master circular in the name “MASTER CIRCULAR ON CREDIT CARD OPERATIONS OF BANKS” bearing No. RBI/2006-07/12 DBOD.FSD.BC. 10/ 24.01.011 /2006-07. Further the
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Reserve Bank of India has updated the Master Circular by incorporating instructions issued upto June 30, 2007 by a new Master Circular on Credit Card Operations of banks bearing no: RBI/2007-08/32 DBOD.FSD.BC. 17/ 24.01.011 /2007-08. (Herein after referred to as the master circular). It deals with all aspects of Credit Card business from marketing to debt collection. It provides regulations to issue the card, notification of interest rates and other charges, billing process and avoiding wrongful billing, usage of Direct Sales Agents and other (debt recovery) agents, protection of customer rights including customer privacy & confidentiality, fair practices in debt collection, redressal of grievances, internal control and monitoring systems and fraud control. And it is very important to note that the above said master circular is mandatory obligation for the banks and Non-Banking Finance Companies to enforce them effectively.
6. In our observation mostly all the functions of Credit Card operations were let out in the name of business process outsourcing to untrained personnel. And those personnel were working in ‘a race-the-target’ manner. So, the guidelines issued by the Reserve Bank of India by its Master Circular and “Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks” (RBI/2006/167 DBOD.NO.BP. 40/ 21.04.158/ 2006-07) went unheard.
7. The marketing executives belonging to the outsourcing agencies of the Credit Card issuing banks provide incorrect and incomplete details about the Credit Card services to attract more customers and earn more incentives. All the rules and regulations of the Credit Card issuing banks were printed in a dull colour at the backside of the Application Form with illegible style and font, the terms are provided only in English language, and it is taken back by the marketing executive
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after the consumer signed it. Consumers are not even allowed to read the terms fully and neither are they explained any thing about the terms and conditions. Hence the customers are by and large unaware on what terms have the card been issued to them.
8. The welcome kit may provide the necessary details of the rules and regulations of the Credit Card business, but they are provided only in English, by the Credit Card issuing banks which is violative of the RBI guidelines. The RBI insists the banks to provide the rules, regulations and other details in English, Hindi and the local language.
9. The billing system of the Credit Card issuing banks are much complicated and beyond the level of understanding of a common man (customer). In the bills unsolicited Insurance Policy premiums and many other charges were levied. If the customer wants any clarifications or finds some faults with the bill, the customer could not find an appropriate person to redress his grievances. Most of the Credit Card issuing banks advise its customers to contact the customer care centre which is also outsourced to BPO’s. These BPO’s operate only by phone. If any such customer calls the “customer care centre” the person who receives the call will never disclose his/her identity and hence there is no track of where the complaint had gone. There is no established or prescribed legal procedure to file the complaints and it is not known to whom the complaint to be addressed. So the customer has to run from pillar to post, to redress their grievances. Even if they do so, they could not find a helping heart to hear their cry. By this time the customer’s next month bill would be generated, and it will reflect the penal charges for the unpaid amount, which is in dispute. This is a never ending story.
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10. I submit that, the last part of Credit Card service, the debt recovery process is a nightmare for most of the customers. Almost all the Credit Card issuing banks have outsourced their recovery process to private agencies. These agencies mostly engage goons and goondas to recover the debt from the customers. This shows that the banks believe in muscle power more than law. These operations have resulted in criminal activities like trespassing, threatening, abduction, illegal confinement, outraging the modesty of women, etc. In most cases customers are harassed to the extent that they are forced to commit suicide, which can be seen very often in newspapers and other media.
11. In case of any default in payment of dues by the customer, all the banks refer the name and identity of the customer to the Credit Information Bureau of India Limited (CIBIL), which is regulated by The Credit Information Companies (Regulation) Act, 2005. As per the RBI directions, the banks should inform the customers regarding referral of their name to CIBIL as defaulter. In practice no bank had adhered to the regulations provided in the Master Circular. So, without hearing the grievances of the customer, their name has been referred to the defaulters list. If a customer’s name is placed in the defaulters list of CIBIL, the customer could not avail any loan from any other bank. When there is no mechanism to redress the grievance of the consumer, the Credit Information mechanism cannot be survived effectively. Without considering the grievance of the customer, he is being punished by the banks by publishing his name in the defaulters list of CIBIL.
12 I submit that, I have made a representation vide my letter dated 14th June, 2007 to all the Respondents stating the need for providing the terms and conditions relating to credit card operations in the regional languages to the
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consumer. So far, except from the 10th Respondent, I have not received any response. As a reply to my above said letter, the 10th Respondent in his letter dated 9th July 0f 2007 states that, he has provided the important terms and condition of the credit card operations in 7 regional languages, which can be accessed on-line having the URL address www.hsbc.co.in. The master circular has clearly mentioned that the Terms and Conditions must be a printed and provided to the customers and mere online publication is not enough for a common customer in India, as most of them are not familiar with usage of Internet.
13. All these incidents and facts narrated above would clearly show that the Reserve Bank has not taken any stringent action to enforce its own regulations for the Credit Card operators.
14. The Ministry of Finance has the overall control on all the banks, and it did not spare any consideration over the interest of the common public, but it used to charge 4% Service Tax on all the charges including the Late Fee, Late Payment Fee, Limit Exceeding Fee, etc collected by the Credit Card operators. So the customers who are burdened exorbitantly by the illogical interest of the banks are again burdened by the Tax system of the Union Government.
15. The banks which are refusing to sanction loans to peasants, small merchants, and tiny sector were preferred to provide loans and advances to the middle income group with the intention to collect the unethical charges and make huge profits. Aggrieved by the inactions of the respondents I’m invoking the writ jurisdictions of this honourable court. I have no other speedy and efficacious or alternative remedy.
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16. No other similar writ petition has been filed are pending before this Honourable Court, the Petitioner had made representations to the concerned authorities. But still neither the state nor the bankers have shown due regard to the demands. Thus the Credit Card holders are left with no other alternate and efficacious remedy. Hence I am constrained to approach this Honourable Court under Art.226 of the Constitution of India, for the following among other
Grounds
A. The practice of marketing the Credit Cards without disclosing the full details of terms and conditions, are violative of Clause:2 of Master Circular on Credit Card Operations of banks bearing No. RBI/2007-08/32 DBOD.FSD.BC. 17/ 24.01.011 /2007-08 (herein referred to as the Master Circular).
B. The practice of generating bills for Credit Card holders without the necessary details of interest and other charges are violative of Clause:3 and 4 of the Master Circular.
C. The non-compliance of RBI guidelines regarding constitution of Grievance Redressal machinery within the bank/NBFC, is in violation of Clause : 7 of Master Circular.
D. The continuous torture caused by the collection agents, is violative of Clause: 5, 6, 7, 8 and 9 of Master Circular. The said Practice in almost all cases results in absolute deprivation of liberty and equality. Their conduct constitutes an assault on the dignity of the entire family of the consumer and jeopardises the very Right to life, as they are forced to such extent of depression that they are provoked to commit suicide. It is there fore violative of Article 21 of the Constitution.
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It is therefore prayed, that this Honourable Court may be pleased to issue A WRIT OR ORDER OR DIRECTION IN THE NATURE OF WRIT OF MANDAMUS directing the respondents 4 to 11 to strictly enforce the guidelines provided in the Master Circular on Credit Card Operations of banks (RBI/2007-08/32 DBOD.FSD.BC. 17/ 24.01.011 /2007-08) consequently direct the respondents 4 to 11
(A) To Constitute the Consumer Grievance Redressal machinery within the organisations at regional level
(B) To Give wide publicity among the people to reach the message effectively as enshrined in the Master Circular (RBI/2007-08/32 DBOD.FSD.BC. 17/ 24.01.011 /2007-08) and
(C) Further direct the respondents to provide all the relevant information & correspondence including the rules and regulations, bill details etc in English and in Tamil for proper understanding of the common man,
And direct the respondents 1 to 3 to monitor the implementation of guidelines insisted in the Master Circular provided by the Reserve Bank of India by the respondents 4 to 11 and pass such further orders as this Honourable Court may deem fit and proper in the circumstances of the case and thus render justice.
Solemnly affirmed at Chennai
on this the 3rd day of August 2007
and signed his name in my presence. BEFORE ME
9th and the last page
No. of Corrns. ADVOCATE CHENNAI.