9th February 2005.
Mr. P. Chidambaram,
The Honable Minister of Finance,
Government of India,
Ministry of Finance,
New Delhi.
Respected Sir,
On behalf of the members of our association, I wish to place before you compelling evidence that will prove beyond doubt the day light robbery being committed by foreign banks or their associate companies in their credit card business.
1. Included with this letter is audio-video evidence of abusive practices adopted by credit card issuing banks. The problem has been independently investigated by the media and they have found enough evidence to suggest that these companies are adopting aggressive and misleading marketing practices followed by illegal recovery methods. Please find time to go through the enclosed video footage which will demonstrate beyond doubt the high handed and criminal methods adopted by these companies. This is included as exhibit ‘A’ for your ready reference.
2. There is a complete lack of any law that allows monitoring the activities of these companies. The activities of these companies affect more than 1.5 Crore Indians and surprisingly, there is no law or guideline available to them for conduct of their business. I have included for your perusal a copy of law enacted in US for the express purpose of preventing credit card companies and other credit recovery agencies from adopting illegal means for recovery of outstanding dues. The law has not only been implemented but is being complied with by these very same companies. The US DoJ has prosecuted companies violating the law. The act and the judgements are enclosed as exhibit ‘B’ and ‘C’ respectively.
3. Please also find time to go through a petition filed by US PRIG (Public Rights Interest Group) in the US against these companies where it has been made clear that these companies follow a method of ‘negative amortization’ that is any outstanding due actually grows bigger if the customer follows the regimen of minimum payment as demanded by the credit card issuing companies. The same is included as exhibit ‘D’ for your ready reference. We have carried out a similar calculation exercise which is marked exhibit ‘E’ which clearly shows that the banks adopt the very same practice here in India too.
4. There also exists enough evidence suggesting that these companies discriminate against the borrower on the basis caste, creed, religion and profession. For example credit cards are denied to Muslims, Lawyers, Politicians, people residing in a particular geographic location and no reasons are ever given for such a denial. These companies are thus indulging in the practice of racial and selective discrimination and therefore should be prosecuted under relevant laws of the land.
5. These exists a law in US called the ‘Equal Credit Opportunity Act’. All these companies adhere to and operate under this law which specifically bars them from discriminating against any person on the basis of caste, creed, color, etc. A copy of the law is enclosed as exhibit ‘F’ for your ready reference. I request that a similar law be enacted to provide all Indians with a fair chance at credit. It is worthy to note that these same banks will never refuse to accept money or open an account or accept deposits on the basis of the same factors that they refuse to lend credit!
6. In the city of Mumbai alone, there are more than 60 to 70 Lac credit cards. The use of a credit card allows a person to have access to an unsecured line of credit. In the guise of providing an unsecured line of credit these credit card companies are flouting and violating all rules and imposing heavy rate of interest on its card members. This rate of interest is around 3% per month and is compounded monthly resulting in a total interest rate in excess of 60% per annum. This is day light robbery and this industry is working without any check or regulation.
7. In case of default of payment of dues, these companies are employing the services of recovery agencies which are totally unregulated. In the matter of recovery of outstanding amounts, these banks threaten the customer under IPC 420 and often take the help of local police in the matter of recovering their monies. As far as my knowledge goes, non-return of borrowed money results in a civil liability and enough remedial measures are available in the law and courts of law allowing for recovery of any outstanding dues. I am enclosing as exhibit ‘G’ a telegram issued to one of our members which clearly demonstrates the interpretation of the law by the credit card issuing bank.
8. Inadvertently the police ends up hauling the credit card holder whereas actually they should be telling the bank to approach the court of law and get the necessary order before taking any action.
9. Also included for your ready perusal is reference material as to how the whole system works and how these companies have adopted the very same predatory methods of cheating the customers worldwide. All this relevant material is enclosed as exhibit ‘F’ for your ready reference.
therefore have the following request to make to you
1. A Parliamentary Commission of Enquiry be immediately setup to investigate all the malpractices being carried out by these banks and credit card issuing companies.
2. Laws on the line of ‘Fair Debt Collection Practices Act’, ‘Equal Credit Opportunity Act’ and any similar law be enacted forthwith to prevent exploitation of the Indian middle class.
3. Clear directions be given to all States of the Union regarding the role of police in all such disputes.
4. Immediate direction to the Governor of Reserve Bank of India to carry out a complete investigation into the affairs of these companies and immediate framing or relevant laws to prevent financial exploitation of the common man.
I assure you of my association complete and unfailing support in taming this wild tiger that is ripping the heart and soul of the middle class of the country.
Thanking you,
Yours Sincerely,
Vijay Kamble
President
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