You can bank on the ombudsman for help

If your bank doesn’t respond to your complaints, this scheme could help

Peter J Fernandes
DNA Money 24th April 2008

Taking loans appears to be the norm rather than an exception today. Working professionals, particularly the youth, succumb to the aggressive campaigns of various banks and end up subscribing to multiple credit cards and or obtaining personal loans. The following instance clearly indicates the need for customer awareness and education, as also the need to train agents handling debt recovery.

A manager of a nationalised bank was attracted by an offer of a foreign bank for free issue of credit card for a year, with added features like accident insurance cover, etc. He availed a credit card in December 2004 and used it up to November 2005. He paid his bills regularly and during the first week of December 2005, before expiry of the one-year term, he wrote to the issuing bank saying he was no more interested in the card. He cut the card to pieces and requested for deletion of his membership from the bank’s card family. He also requested the bank to block the card to avoid misuse.

There was no acknowledgement from the bank. Then, in January 2006, he received a bill containing an entry of Rs 600 towards carried over bill penalty and late fee and another entry of Rs 2,000 towards card renewal charges. He wrote to the bank saying he had paid all bills and owed them nothing. Again, there was no acknowledgement from the bank.

In March, he received another bill. The same story followed - he wrote to the bank, but there was no response.

After six months, when the bill amount had swelled to Rs 6,000, the customer tried contacting the bank through other means. Getting through the helpline seemed nearly impossible, but he did manage to get through to the credit card department of the bank and narrated his story to an official. He was assured that the matter would be looked into.

Then, after 3-4 months, a recovery agent from the bank called at his residence and informed his wife that the card holder owed Rs 9,000 and the amount had to be paid immediately. He also started receiving telephone calls from the agents, which were often abusive. They refused to accept that he owed the bank nothing.
By October 2007, the bill amount had increased to around Rs 17,000. Finally, the manager wrote to the nodal officer of the foreign bank, apprising him of the details and the harassment meted out to him. He marked a copy of the letter to the chief general manager, Reserve Bank of India and the Banking Ombudsman.
This time, the bank acted promptly and sent him, for the first time, a detailed letter. It was stated that in October 2005, Rs 600 was spent by the cardholder using the card, but the amount was paid one month later and that with two years’ renewal charges and interest thereon, the dues had gone up to Rs 17,000. The bank decided to waive the amount and close the matter and advised the cardholder that the matter stood settled.

Clearly, approaching the Ombudsman’s office had done the trick for our man. Readers faced with similar problems would do well to keep that in mind — if your bank doesn’t respond to your complaints, reach for the Banking Ombudsman.
Also, remember to ensure that once the bank has come around to addressing your grievance and settling theissue, as in the above case, you don’t continue to figure as a defaulter on the Credit Information Bureau (India) Ltd (CIBIL) database.

CIBIL is a one-stop shop for banks to check the credit history of an individual. It is a body formed by 147 banks and other financial service providers to maintain a data bank of an individual’s transactions. Banks share their lending data with CIBIL and in turn get credit reports of prospective borrowers from it, indicating the amount the individual has borrowed from other banks and the amount overdue, if any. Understandably, someone who figures as a defaulter, whether or not he has actually defaulted, would be less likely to get a loan from a bank.

(The author is a credit counselor at ‘Abhay’, a credit-counsellingcentre. He may be reached at abhaycenter@gmail.com)