This blog is no longer being maintained. As we now have our own website hosted on our own domain.
Please visit us at our new website Here.
Please feel free to send us your complaints, suggestions and donations.
Monday, 7 December 2009
Saturday, 24 October 2009
Credit Cards or Misery Cards...
By SS Kumar (CMD Astral Systems India Pvt Ltd).
In keeping with the spread of sophisticated life styles in the west, the credit cards phenomenon has invaded India and most people have gotten so used to it that they can not live with out it. However, unlike in the west, the dice here in India is totally loaded against the user as the Reserve Bank of India is able to do very little in securing the user, says SS Kumar.
The following are the ways in which card issuing banks try to fleece the card holder:
Late fee
Disputed Claims
Biggest fraud through sale of policies on phone
Why do the banks charge exorbitant interest rates in India?
Life time membership fee fraud
Wednesday, 17 June 2009
GE Money continues using threats...
One of our members has lodged a specific complaint against GE Money.
It seems GE Money issued her a cash card some years back. She used the card and some time in 2006 fell in default due to non-payment of her dues.
She was offered a one-time settlement by an officer of GE Money at 18,000 rupees. The lady paid the amount to the officer in good faith but failed to take a settlement letter or receipt of the money she paid as the officer sitting in the Mahim office assured her that a letter takes time and it will be delivered to her home.
Then for two years she did not hear anything from GE Money. Suddenly in 2009, the company has started calling her again. The company now informs her that the gentleman she had paid the money to in no longer in the service of the company and there is no record of the money that she paid as one time settlement.
The caller who is harassing our member has threatened to have her arrested. He calls our member and places the call on conference with a police officer (identified as Patil) from the Mahim police station.
Questions that we raise are:
1. Why did GE Money keep quite for 2 years after the member had already paid and entered into a one time settlement with the company?
2. Why did she not receive any bills for this period and why is she suddenly getting a bill of 98000?
3. The matter of money lending and borrowing is at best a civil offense, why is police getting involved in all this?
4. We have reason to believe that the police personnel who is coming on the conference call is an employee of the company as he has failed to provide his designation and contact information including his police identification. In such case, why GE Money recovery officer should not be tried for impersonation of a police official?
Members are advised to be aware of this new tactics being adopted by credit card companies and private MNC involved in lending money.
It seems GE Money issued her a cash card some years back. She used the card and some time in 2006 fell in default due to non-payment of her dues.
She was offered a one-time settlement by an officer of GE Money at 18,000 rupees. The lady paid the amount to the officer in good faith but failed to take a settlement letter or receipt of the money she paid as the officer sitting in the Mahim office assured her that a letter takes time and it will be delivered to her home.
Then for two years she did not hear anything from GE Money. Suddenly in 2009, the company has started calling her again. The company now informs her that the gentleman she had paid the money to in no longer in the service of the company and there is no record of the money that she paid as one time settlement.
The caller who is harassing our member has threatened to have her arrested. He calls our member and places the call on conference with a police officer (identified as Patil) from the Mahim police station.
Questions that we raise are:
1. Why did GE Money keep quite for 2 years after the member had already paid and entered into a one time settlement with the company?
2. Why did she not receive any bills for this period and why is she suddenly getting a bill of 98000?
3. The matter of money lending and borrowing is at best a civil offense, why is police getting involved in all this?
4. We have reason to believe that the police personnel who is coming on the conference call is an employee of the company as he has failed to provide his designation and contact information including his police identification. In such case, why GE Money recovery officer should not be tried for impersonation of a police official?
Members are advised to be aware of this new tactics being adopted by credit card companies and private MNC involved in lending money.
Wednesday, 6 May 2009
While Credit Card companies get smashed in US, politicians in India Sleep
Credit card companies use a variety of unfair practices to trap consumers in a cycle of over-priced debt. The companies are allowed by law and by regulators to raise your rates for any reason, including no reason. They are allowed to operate nationally out of states, like Delaware and South Dakota, with weak consumer laws and no limits on interest rates or fees. No matter where you live, even in a state with strong laws, the weak pro-industry laws of those states govern your contract.
Consumers should either pay balances in full, or make the largest payments they can afford, and always pay early in the cycle to avoid late fees and, worse, having their rates jacked to penalty levels only a loan shark would love—36% APR or more.
For years, credit card companies were the most profitable form of banking, according to the Federal Reserve. But to ratchet up profits even more, they have recently numerous “trick, trap and gotcha” practices.
First, they started tricking consumers by advancing long-standing regular due dates all of a sudden by as much as 5 days or more to trick consumers into paying late. They put due dates on weekends and claimed that bills received after 12 noon or 1pm were late. They started imposing late fees not when bills were 30 days late, but as little as one minute or one day late. The regulators allowed this. Then, even after raising late fees to $39 or more, they claimed that being late also allowed them to jack interest rates by three times or more to 36% APR or even more.
Then, they started claiming that even if your payment history to them was perfect, they could jack your interest rate if your credit score declined (which could happen due to identity theft or numerous innocent reasons) or if you were late to some other creditor. They called this universal default.
Then, as the third strike against consumers, they invoked the extremely unfair “change the rules for any reason, including no reason” clause and started raising interest rates for no reason at all. This outraged Americans who started complaining to the Federal Reserve. Over 60,000 consumers complained. The normally somnolent agency woke up. It agreed with Maloney and Dodd that these and certain other practices were unfair. They proposed and on December 18, 2008 finalized, rules that make the practices illegal. In the past, the Fed had relied solely on disclosure to “protect” consumers. This was a major step.
But the Fed gave the banks until July 2010 to comply with the rules. So, it is important that Congress passes a law that takes effect more quickly. Further, a law will be more permanent than a rule from the regulators. And, the law will likely be stronger.
The credit card companies also spent millions on lobbying and campaign donations to get Congress to pass 2005 bankruptcy amendments that make it harder and more expensive to file for bankruptcy, so aggrieved consumers spend years paying over-priced credit card interest instead and never get a fresh start.
For years the firms also lowered minimum monthly payments and encouraged the use of cards for everyday expenses—through rewards programs—so that many consumers accumulated massive amounts of credit card debt. Until recently, a consumer who owed credit card debt of $5,000 at a common 16 percent APR, who only made the typical 2 percent minimum payment, would take 26 years to pay off the card, even if it was cut up and never used again.
Although the ability of states to regulate the fees and interest rates (APRs) of credit card companies has been severely restricted by federal preemption doctrine, which has allowed the weak laws of Delaware and South Dakota to override the state laws where credit card customers live, states are taking action in one area. In response to the growing problem of aggressive credit card marketing to young people on college campuses, some states, such as California, have restricted campus credit card marketing. Several colleges and universities have taken similar actions at the local level. See the U.S. PIRG reports, "Graduating Into Debt: Credit card marketing on college campuses," and “The Campus Credit Credit trap” and “Characteristics of Fair Campus Credit Cards” at truthaboutcredit.org for more information.
Consumers should either pay balances in full, or make the largest payments they can afford, and always pay early in the cycle to avoid late fees and, worse, having their rates jacked to penalty levels only a loan shark would love—36% APR or more.
For years, credit card companies were the most profitable form of banking, according to the Federal Reserve. But to ratchet up profits even more, they have recently numerous “trick, trap and gotcha” practices.
First, they started tricking consumers by advancing long-standing regular due dates all of a sudden by as much as 5 days or more to trick consumers into paying late. They put due dates on weekends and claimed that bills received after 12 noon or 1pm were late. They started imposing late fees not when bills were 30 days late, but as little as one minute or one day late. The regulators allowed this. Then, even after raising late fees to $39 or more, they claimed that being late also allowed them to jack interest rates by three times or more to 36% APR or even more.
Then, they started claiming that even if your payment history to them was perfect, they could jack your interest rate if your credit score declined (which could happen due to identity theft or numerous innocent reasons) or if you were late to some other creditor. They called this universal default.
Then, as the third strike against consumers, they invoked the extremely unfair “change the rules for any reason, including no reason” clause and started raising interest rates for no reason at all. This outraged Americans who started complaining to the Federal Reserve. Over 60,000 consumers complained. The normally somnolent agency woke up. It agreed with Maloney and Dodd that these and certain other practices were unfair. They proposed and on December 18, 2008 finalized, rules that make the practices illegal. In the past, the Fed had relied solely on disclosure to “protect” consumers. This was a major step.
But the Fed gave the banks until July 2010 to comply with the rules. So, it is important that Congress passes a law that takes effect more quickly. Further, a law will be more permanent than a rule from the regulators. And, the law will likely be stronger.
The credit card companies also spent millions on lobbying and campaign donations to get Congress to pass 2005 bankruptcy amendments that make it harder and more expensive to file for bankruptcy, so aggrieved consumers spend years paying over-priced credit card interest instead and never get a fresh start.
For years the firms also lowered minimum monthly payments and encouraged the use of cards for everyday expenses—through rewards programs—so that many consumers accumulated massive amounts of credit card debt. Until recently, a consumer who owed credit card debt of $5,000 at a common 16 percent APR, who only made the typical 2 percent minimum payment, would take 26 years to pay off the card, even if it was cut up and never used again.
Although the ability of states to regulate the fees and interest rates (APRs) of credit card companies has been severely restricted by federal preemption doctrine, which has allowed the weak laws of Delaware and South Dakota to override the state laws where credit card customers live, states are taking action in one area. In response to the growing problem of aggressive credit card marketing to young people on college campuses, some states, such as California, have restricted campus credit card marketing. Several colleges and universities have taken similar actions at the local level. See the U.S. PIRG reports, "Graduating Into Debt: Credit card marketing on college campuses," and “The Campus Credit Credit trap” and “Characteristics of Fair Campus Credit Cards” at truthaboutcredit.org for more information.
Thursday, 5 March 2009
Thursday, 26 February 2009
Credit Card Companies start offering money to clear off dues!
In a recent report emanating from US, it seems that American Express has started offering its card holders up to 15000 Rupees (300 US Dollars) so that they can clear their outstanding dues on their existing credit cards and stop using them!
Such a disaster was imminent given the way banks have gone and distributed credit cards. In India too leading banks such as ICICI, HDFC, Citibank, Standard Chartered, etc have bent all rules and often given multiple credit cards to people who were not so deserving.
We at CCAI have been warning about the crisis but to no avail.
On top of this the exorbitant interest being charged by these banks along with job losses will lead to more defaults and may lead to the collapse of banks who have tread this path.
Read the story here
Such a disaster was imminent given the way banks have gone and distributed credit cards. In India too leading banks such as ICICI, HDFC, Citibank, Standard Chartered, etc have bent all rules and often given multiple credit cards to people who were not so deserving.
We at CCAI have been warning about the crisis but to no avail.
On top of this the exorbitant interest being charged by these banks along with job losses will lead to more defaults and may lead to the collapse of banks who have tread this path.
Read the story here
Tuesday, 20 January 2009
Congress pushes for credit card relief
New restrictions on lenders will take effect in 2010, but several in Congress are leading the campaign for faster reform.
By Neil deMause
Last Updated: January 19, 2009: 8:46 AM ET
(CNNMoney.com) -- With last week's re-introduction in Congress of a bill to rein in what critics say are abusive credit card practices, the stage is set for a Washington battle that will determine whether entrepreneurs and other credit card users get relief soon from soaring rates and fees.
The Credit Cardholders' Bill of Rights was introduced Thursday by Rep. Carolyn Maloney, D-N.Y., in the House, and Senators Mark Udall, D-Colo., and Charles Schumer, D-N.Y., in the Senate. The legislation would take a number of steps to restrict credit card issuers, including:
* Banning retroactive rate increases on existing balances for cardholders in good standing. Rates could still be raised if a customer were more than 30 days late with a payment.
* Requiring 45 days' notice of all rate increases on new charges.
* Banning "double-cycle billing," which allows fees to be charged for balances that were already paid off.
* Allowing cardholders to cap how much they can charge to their cards, to avoid overdraft fees.
* Outlawing "universal default" clauses, which automatically hike rates on a card based on unrelated financial activity, such as being late paying another bill.
"A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees," Maloney said in a press statement. "This bill levels the playing field between card companies and cardholders while fostering fair competition and free market values."
Read the original post here....
By Neil deMause
Last Updated: January 19, 2009: 8:46 AM ET
(CNNMoney.com) -- With last week's re-introduction in Congress of a bill to rein in what critics say are abusive credit card practices, the stage is set for a Washington battle that will determine whether entrepreneurs and other credit card users get relief soon from soaring rates and fees.
The Credit Cardholders' Bill of Rights was introduced Thursday by Rep. Carolyn Maloney, D-N.Y., in the House, and Senators Mark Udall, D-Colo., and Charles Schumer, D-N.Y., in the Senate. The legislation would take a number of steps to restrict credit card issuers, including:
* Banning retroactive rate increases on existing balances for cardholders in good standing. Rates could still be raised if a customer were more than 30 days late with a payment.
* Requiring 45 days' notice of all rate increases on new charges.
* Banning "double-cycle billing," which allows fees to be charged for balances that were already paid off.
* Allowing cardholders to cap how much they can charge to their cards, to avoid overdraft fees.
* Outlawing "universal default" clauses, which automatically hike rates on a card based on unrelated financial activity, such as being late paying another bill.
"A credit card agreement is supposed to be a contract, but in recent years cardholders have lost the ability to say no to unfair interest rate hikes and fees," Maloney said in a press statement. "This bill levels the playing field between card companies and cardholders while fostering fair competition and free market values."
Read the original post here....
Monday, 12 January 2009
Consumer Groups Applaud Senate Banking Chairman's Credit Card Reform Bill
When will such a thing happen in India?
Wednesday, April 30, 2008
Legislation Would End the Most Abusive & Costly Credit Card Practices
WASHINGTON, D.C. – A coalition of consumer, labor and civil rights groups lauded tough new legislation to prohibit abusive and unfair credit card practices, introduced today by Senate Banking Committee Chairman Chris Dodd. In a letter of support for the legislation, the groups noted that “as the U.S. economy tightens, financially vulnerable families need the protections of the Credit CARD Act more than ever.”
"This legislation stands for the basic principle of fair dealing that every American expects card companies to abide by―a deal should be a deal." said Jeannine Kenney, senior policy analyst with Consumers Union. "The Credit CARD Act requires card companies to finally play by that simple rule."
The Credit Card Accountability, Responsibility and Disclosure Act targets the most abusive practices used by credit card issuers, including:
Wednesday, April 30, 2008
Legislation Would End the Most Abusive & Costly Credit Card Practices
WASHINGTON, D.C. – A coalition of consumer, labor and civil rights groups lauded tough new legislation to prohibit abusive and unfair credit card practices, introduced today by Senate Banking Committee Chairman Chris Dodd. In a letter of support for the legislation, the groups noted that “as the U.S. economy tightens, financially vulnerable families need the protections of the Credit CARD Act more than ever.”
"This legislation stands for the basic principle of fair dealing that every American expects card companies to abide by―a deal should be a deal." said Jeannine Kenney, senior policy analyst with Consumers Union. "The Credit CARD Act requires card companies to finally play by that simple rule."
The Credit Card Accountability, Responsibility and Disclosure Act targets the most abusive practices used by credit card issuers, including:
- Eliminating unjustified interest rate hikes and unfair "any-time/any-reason" contract clauses. During the life of the card, card issuers could not raise rates for any reason other than a change in the index for variable rate cards, the expiration of a teaser rate, or default relating to the card account, ending the practice of raising rates even for card holders in good standing. Rate hikes resulting from default on the card could not be applied to the prior balance.
- Requiring honest, fair penalty rates. Under the Act, if the issuer does impose a penalty rate, it must tell the consumer exactly why, and limit the penalty to six months if the consumer commits no further violations.
- Limiting excessive and growing penalty fees. The Credit CARD Act would require that penalty fees be reasonably related to the costs that credit card issuers incur because of a late payment or over-limit transactions and prohibit card issuers from charging interest on penalty fees.
- Prohibiting late fees for on-time payments. The Act would prohibit late fees upon proof of mailing seven days prior to the due date, and require card issuers to mail cardholders' statements within 21 days of the due date.
- Giving cardholders greater choice. The bill would empower consumers to instruct card issuers not to allow transactions that would trigger over-limit fees, require more advance notice when interest rates are raised, and give consumers the absolute right to cancel cards when rates are hiked.
- Eliminating abusive and hidden finance charges. Credit card issuers would be prohibited from imposing finance charges repaid during the grace period (so-called double-cycle billing) and would be required to allocate payments to the highest rate balance first when consumers hold balances at different interest rates on the same card. Today, card companies apply payments to lower-rate balances first, resulting in unfair and excessive finance charges.
- Limiting aggressive marketing, and irresponsible lending, to young consumers without the ability to repay debt. Credit card issuers would be unable to provide credit cards to consumers under age 21 unless the consumer has a responsible cosigner, can demonstrate ability to repay, or takes a certified financial literacy or financial education course.
Banks’ credit card bluster rings hollow
Archive for Wednesday, May 07, 2008
By David Lazarus
May 07, 2008 in print edition C-1
Ijust love it when the credit card industry threatens to take its toys and go home.
That, in effect, was what card issuers said in response to the announcement by federal regulators last week that they planned to crack down on some of the industry’s more consumer-unfriendly practices.
To increase fairness, the Federal Reserve and two other agencies would, among other things, require card issuers to mail out statements at least 21 days before a payment’s due date and prohibit issuers from applying partial payments only to balances with the lowest interest rates – thus leaving costlier, higher-rate balances intact.
Edward Yingling, president of the American Bankers Assn., said in a statement that the Fed’s proposals represent “an unprecedented regulatory intrusion into marketplace pricing and product offerings.”
He said the measures would “result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards.”
In other words, if the industry had to play by the proposed rules, it wouldn’t be able to offer as much plastic to as many people.
Nonsense. No amount of regulation has ever resulted in card issuers scaling back their offerings. More than 5 billion solicitations were mailed to U.S. households last year alone.
Read rest of the news here...
By David Lazarus
May 07, 2008 in print edition C-1
Ijust love it when the credit card industry threatens to take its toys and go home.
That, in effect, was what card issuers said in response to the announcement by federal regulators last week that they planned to crack down on some of the industry’s more consumer-unfriendly practices.
To increase fairness, the Federal Reserve and two other agencies would, among other things, require card issuers to mail out statements at least 21 days before a payment’s due date and prohibit issuers from applying partial payments only to balances with the lowest interest rates – thus leaving costlier, higher-rate balances intact.
Edward Yingling, president of the American Bankers Assn., said in a statement that the Fed’s proposals represent “an unprecedented regulatory intrusion into marketplace pricing and product offerings.”
He said the measures would “result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards.”
In other words, if the industry had to play by the proposed rules, it wouldn’t be able to offer as much plastic to as many people.
Nonsense. No amount of regulation has ever resulted in card issuers scaling back their offerings. More than 5 billion solicitations were mailed to U.S. households last year alone.
Read rest of the news here...
Friday, 9 January 2009
Cibil will launch private score for personal loans
Khyati Dharamsi and Joel Rebello.
Friday, January 9, 2009 2:19 IST
After launching a credit score for individuals a bank has lent to, Credit Information Bureau of India (Cibil), the only credit bureau in India, is on its way to launching a credit score for personal loans and other products to help banks reduce their bad loans. Arun Thukral, managing director of Cibil, talks to DNA. Excerpts from an interview:
Cibil has been talking about making credit report available to individuals?
You know that in India, there is no unique identification number. We need a process in place to verify that the person asking for the report is indeed the person whose report it is. Due to the lack of a unique identification number, we use date of birth, mailing address, PAN number, passport number and voter's ID for verification. We might also have to ask for documents initially and cross-check those. But that can't be done in Cibil's office. We need a different process centre and that should be ready in a year. By 2010, individuals will be able to access their own credit reports.
How has the situation changed given that banks are going slow on lending?
Banks are still using our reports to acquire customers. These reports are also used to review the portfolios of customers they already have. That's where the major shift is. Banks have become more selective about the customer profiles they loan money to. The account review or portfolio review tells you how your portfolio is doing. Everybody today is focussing on the regular review of the portfolio to know its health.
Read rest of the story here...
Friday, January 9, 2009 2:19 IST
After launching a credit score for individuals a bank has lent to, Credit Information Bureau of India (Cibil), the only credit bureau in India, is on its way to launching a credit score for personal loans and other products to help banks reduce their bad loans. Arun Thukral, managing director of Cibil, talks to DNA. Excerpts from an interview:
Cibil has been talking about making credit report available to individuals?
You know that in India, there is no unique identification number. We need a process in place to verify that the person asking for the report is indeed the person whose report it is. Due to the lack of a unique identification number, we use date of birth, mailing address, PAN number, passport number and voter's ID for verification. We might also have to ask for documents initially and cross-check those. But that can't be done in Cibil's office. We need a different process centre and that should be ready in a year. By 2010, individuals will be able to access their own credit reports.
How has the situation changed given that banks are going slow on lending?
Banks are still using our reports to acquire customers. These reports are also used to review the portfolios of customers they already have. That's where the major shift is. Banks have become more selective about the customer profiles they loan money to. The account review or portfolio review tells you how your portfolio is doing. Everybody today is focussing on the regular review of the portfolio to know its health.
Read rest of the story here...
Monday, 5 January 2009
Credit Card Companies Willing to Deal Over Debt
Published: January 2, 2009
Hard times are usually good times for debt collectors, who make their money morning and night with the incessant ring of a phone.
But in this recession, perhaps the deepest in decades, the unthinkable is happening: collectors, who usually do the squeezing, are getting squeezed a bit themselves.
After helping to foster the explosive growth of consumer debt in recent years, credit card companies are realizing that some hard-pressed Americans will not be able to pay their bills as the economy deteriorates.
So lenders and their collectors are rushing to round up what money they can before things get worse, even if that means forgiving part of some borrowers’ debts. Increasingly, they are stretching out payments and accepting dimes, if not pennies, on the dollar as payment in full.
“You can’t squeeze blood out of a turnip,” said Don Siler, the chief marketing officer at MRS Associates, a big collection company that works with seven of the 10 largest credit card companies. “The big settlements just aren’t there anymore.”
Lenders are not being charitable. They are simply trying to protect themselves.
Banks and card companies are bracing for a wave of defaults on credit card debt in early 2009, and they are vying with each other to get paid first. Besides, the sooner people get their financial houses in order, the sooner they can start borrowing again.
So even as many banks cut consumers’ credit lines, raise card fees and generally pull back on lending, some lenders are trying to give customers a little wiggle room. Bank of America, for instance, says it has waived late fees, lowered interest charges and, in some cases, reduced loan balances for more than 700,000 credit card holders in 2008.
Read the Entire Story here...
Friday, 2 January 2009
Banks responsible for card, PIN delivery
Mumbai: In case of misuse of debit cards, banks cannot escape responsibility by saying that they have delivered the card and the personal identification number (PIN) at the address mentioned in the application.
A bank customer has approached the Ombudsman with a complaint about withdrawal of funds through unauthorised use of his card. The complainant said that he had asked for a debit card and the bank responded by issuing a card with zero liability.
Though he did not receive the card, he found that Rs 25,000 was debited from his account. On enquiry from the bank, he gathered that the card was delivered to a security staffer in his office building, without checking identification particulars.
The PIN was also delivered to another staffer in his office. This prompted the ‘card holder’ to seek a refund from the bank, a plea that was turned down.
Read rest of the story here....
A bank customer has approached the Ombudsman with a complaint about withdrawal of funds through unauthorised use of his card. The complainant said that he had asked for a debit card and the bank responded by issuing a card with zero liability.
Though he did not receive the card, he found that Rs 25,000 was debited from his account. On enquiry from the bank, he gathered that the card was delivered to a security staffer in his office building, without checking identification particulars.
The PIN was also delivered to another staffer in his office. This prompted the ‘card holder’ to seek a refund from the bank, a plea that was turned down.
Read rest of the story here....
Thursday, 23 October 2008
Face music for unwanted calls, HC tells ICICI
Krishnadas Rajagopal
Posted: Oct 23, 2008 at 0042 hrs IST
New Delhi, October 22 Unsolicited telemarketing calls trouble everyone — even judges. During a hearing on Wednesday, a senior judge of Delhi High Court gave vent to his ire on ICICI Bank for making “unsolicited marketing calls” to him.
“I receive calls at all time of the day from ICICI Bank,” Justice Vikramjit Sen said. “I do not know what business you get out of such calls.... You are a nuisance and have to face the music for making these unsolicited calls.”
The division bench was hearing an application moved by ICICI Bank for a stay on revival of contempt of court proceedings before the Delhi State Consumer Commission on the basis of a petition by advocate Nivedita Sharma. Sharma had filed her appeal in response to the “menace of unsolicited commercial telemarketing calls” and divulging “private and confidential information”.
On December 26, 2006 the consumer commission had levied a Rs 12.5-lakh penalty on the bank for making nuisance calls. Though the High Court subsequently stayed the Commission’s decision on September 11, 2007, the court had warned the bank against making “unsolicited marketing calls”.
The court had also warned the bank that the stay order should not be misinterpreted as “a licence to continue making unsolicited calls to customers”. The High Court had also given customers liberty to move the consumer commission if they continued to receive unwanted marketing calls from ICICI Bank.
“I moved the Commission because I still got calls from the bank despite registering with the ‘Do Not Call’ registry,” Sharma told Newsline. “The calls were in clear violation of the consumer commission’s order.”
The bank contended before the High Court bench today that Sharma was merely misusing the “liberty granted to her by the court” to seek relief with the consumer commission if still pestered by unsolicited calls. Terming her current litigation before the Commission as “misconceived”, the bank argued that it was impossible for Sharma to receive any unsolicited call as her name had been “updated” on the ‘Do Not Call’ registry.
At this point Justice Sen sought to prove the bank wrong by citing his personal example. “Do you think you are above the law?” the judge asked. “Who is your highest ranking officer in northern India... bring him here; let him explain these calls.”
The bench then kept aside the case for a while to give the counsel time to summon the concerned bank official. Later, the court gave some reprieve to the bank to file a suitable response by the next date of hearing.
Read the post on Indian Express
Posted: Oct 23, 2008 at 0042 hrs IST
New Delhi, October 22 Unsolicited telemarketing calls trouble everyone — even judges. During a hearing on Wednesday, a senior judge of Delhi High Court gave vent to his ire on ICICI Bank for making “unsolicited marketing calls” to him.
“I receive calls at all time of the day from ICICI Bank,” Justice Vikramjit Sen said. “I do not know what business you get out of such calls.... You are a nuisance and have to face the music for making these unsolicited calls.”
The division bench was hearing an application moved by ICICI Bank for a stay on revival of contempt of court proceedings before the Delhi State Consumer Commission on the basis of a petition by advocate Nivedita Sharma. Sharma had filed her appeal in response to the “menace of unsolicited commercial telemarketing calls” and divulging “private and confidential information”.
On December 26, 2006 the consumer commission had levied a Rs 12.5-lakh penalty on the bank for making nuisance calls. Though the High Court subsequently stayed the Commission’s decision on September 11, 2007, the court had warned the bank against making “unsolicited marketing calls”.
The court had also warned the bank that the stay order should not be misinterpreted as “a licence to continue making unsolicited calls to customers”. The High Court had also given customers liberty to move the consumer commission if they continued to receive unwanted marketing calls from ICICI Bank.
“I moved the Commission because I still got calls from the bank despite registering with the ‘Do Not Call’ registry,” Sharma told Newsline. “The calls were in clear violation of the consumer commission’s order.”
The bank contended before the High Court bench today that Sharma was merely misusing the “liberty granted to her by the court” to seek relief with the consumer commission if still pestered by unsolicited calls. Terming her current litigation before the Commission as “misconceived”, the bank argued that it was impossible for Sharma to receive any unsolicited call as her name had been “updated” on the ‘Do Not Call’ registry.
At this point Justice Sen sought to prove the bank wrong by citing his personal example. “Do you think you are above the law?” the judge asked. “Who is your highest ranking officer in northern India... bring him here; let him explain these calls.”
The bench then kept aside the case for a while to give the counsel time to summon the concerned bank official. Later, the court gave some reprieve to the bank to file a suitable response by the next date of hearing.
Read the post on Indian Express
Tuesday, 14 October 2008
When Life Succumbs to Debt
Another article appearing in Times of India, Mumbai Edition dated 14-10-2008
WHEN LIFE SUCCUMBS TO DEBT
There Has Been An Increase In Serial Borrowers, Who Keep Taking Credit Cards And Loans To Pay Off Earlier Amounts
Bella Jaisinghani | TNN
Mumbai: Desperate times call for desperate measures, though the most drastic option of all is chosen by only a few. The global meltdown has come as a double whammy to overspenders whose backs are already bent under piles of mounting debt.
Instances of Mumbaikars having taken several credit cards or loans just so they can attempt to pay off previous debt are not uncommon. The attempts are usually unsuccessful, as they only end up increasing the credit burden.
In 2006, then RBI governor Y V Reddy noticed how liberal pay packages and unbridled consumerism were resulting in a lethal cocktail. He recommended that banks devise a counselling mechanism to educate people about financial matters—mainly, how to resolve debt issues and how to invest. Bank of India, ICICI Bank and Union Bank took the cue and started such centres across cities and small towns too, since rising credit is not restricted to just urban areas anymore.
Of these, Abhay Credit Counselling Center, which is run by Bank of India in middle-class Prabhadevi, currently has 1,000 desperate borrowers on its counselling list. “Around 90% of these people are serial borrowers. They find it difficult to pay off money owed on one credit card, so they procure another one in the vain hope of paying up on the first. Then they get yet another one to pay off dues on the second,’’ said V N Kulkarni, chief counsellor. “They often do that with personal loans as well.’’
Just two days ago, a 32-year-old chawl resident walked into Abhay demanding that they arrange for an umbrella loan to cover his various borrowings. Kulkarni and his team were shocked to learn that the man, who had old parents, a wife and an infant to support, had taken eight personal loans amounting to Rs 22 lakh. He also had nine credit cards, whose total debt amounts to Rs 9 lakh.
“The youngster works with a private firm and earns merely Rs 10,000 per month,’’ said c o u n s e l l o r A s h o k Kargutkar, himself overwhelmed by the facts. “He even refused to believe he was a defaulter, saying he did pay off a little debt each month.’’ Upon learning that he did not have any assets, like a house that he could sell to pay off the debt, all the Abhay team could do was ask the gentleman to contact a lawyer and file for insolvency.
Part of the blame, no doubt, must be shared by the financial institutions that have been forcing credit cards on customers without checking their credit-worthiness. Kulkarni said that, of late, financial institutions had been distributing credit cards “like prasad”.
Counsellor Peter Fernandes strongly felt that banks ought to tighten the rules and conduct thorough background checks before issuing credit cards to perennial defaulters. “A borrower is not likely to disclose that he has several unpaid loans to his name and the banks don’t care until the client defaults,’’ he said.
Then, when it is too late, banks are known to despatch recovery agents to chase defaulters, often leading to unpleasant consequences. A woman who bought a car just so she could hire it out to a rental company for profit, was allegedly killed by the agency she owed money to. Afterwards, the agency even pressured her husband—who knew nothing of the loan—to pay up the loan. The police then made out a case for murder against the agency, which stopped the harassment.
Occasionally, credit counsellors do meet clients who warn that they will commit suicide if they go insolvent. “We patiently have to advise them that suicide is not an option, that they must learn to face the situation,’’ said Kulkarni. “The debt will remain even if he kills himself. In fact, how will the family manage financially without the man’s support.’’
FAMILIES FALL APART
MARCH 2004: Trader Ketan Anuwadia and his wife Keena killed their two sons, Rishi and Devansh, before committing suicide at their Kandivli residence. Ketan had run into losses of Rs 1.35 crore.
DECEMBER 2003: Santosh Surve, director of chit fund company Kalpavruksha Finance, shot dead his wife and two daughters before committing suicide at their Thane residence. He was unable to repay investors.
MAY 2003: Assistant police inspector Prashant Sawant shot dead his wife and son before committing suicide in their flat in Chembur. He was said to be depressed.
WHEN LIFE SUCCUMBS TO DEBT
There Has Been An Increase In Serial Borrowers, Who Keep Taking Credit Cards And Loans To Pay Off Earlier Amounts
Bella Jaisinghani | TNN
Mumbai: Desperate times call for desperate measures, though the most drastic option of all is chosen by only a few. The global meltdown has come as a double whammy to overspenders whose backs are already bent under piles of mounting debt.
Instances of Mumbaikars having taken several credit cards or loans just so they can attempt to pay off previous debt are not uncommon. The attempts are usually unsuccessful, as they only end up increasing the credit burden.
In 2006, then RBI governor Y V Reddy noticed how liberal pay packages and unbridled consumerism were resulting in a lethal cocktail. He recommended that banks devise a counselling mechanism to educate people about financial matters—mainly, how to resolve debt issues and how to invest. Bank of India, ICICI Bank and Union Bank took the cue and started such centres across cities and small towns too, since rising credit is not restricted to just urban areas anymore.
Of these, Abhay Credit Counselling Center, which is run by Bank of India in middle-class Prabhadevi, currently has 1,000 desperate borrowers on its counselling list. “Around 90% of these people are serial borrowers. They find it difficult to pay off money owed on one credit card, so they procure another one in the vain hope of paying up on the first. Then they get yet another one to pay off dues on the second,’’ said V N Kulkarni, chief counsellor. “They often do that with personal loans as well.’’
Just two days ago, a 32-year-old chawl resident walked into Abhay demanding that they arrange for an umbrella loan to cover his various borrowings. Kulkarni and his team were shocked to learn that the man, who had old parents, a wife and an infant to support, had taken eight personal loans amounting to Rs 22 lakh. He also had nine credit cards, whose total debt amounts to Rs 9 lakh.
“The youngster works with a private firm and earns merely Rs 10,000 per month,’’ said c o u n s e l l o r A s h o k Kargutkar, himself overwhelmed by the facts. “He even refused to believe he was a defaulter, saying he did pay off a little debt each month.’’ Upon learning that he did not have any assets, like a house that he could sell to pay off the debt, all the Abhay team could do was ask the gentleman to contact a lawyer and file for insolvency.
Part of the blame, no doubt, must be shared by the financial institutions that have been forcing credit cards on customers without checking their credit-worthiness. Kulkarni said that, of late, financial institutions had been distributing credit cards “like prasad”.
Counsellor Peter Fernandes strongly felt that banks ought to tighten the rules and conduct thorough background checks before issuing credit cards to perennial defaulters. “A borrower is not likely to disclose that he has several unpaid loans to his name and the banks don’t care until the client defaults,’’ he said.
Then, when it is too late, banks are known to despatch recovery agents to chase defaulters, often leading to unpleasant consequences. A woman who bought a car just so she could hire it out to a rental company for profit, was allegedly killed by the agency she owed money to. Afterwards, the agency even pressured her husband—who knew nothing of the loan—to pay up the loan. The police then made out a case for murder against the agency, which stopped the harassment.
Occasionally, credit counsellors do meet clients who warn that they will commit suicide if they go insolvent. “We patiently have to advise them that suicide is not an option, that they must learn to face the situation,’’ said Kulkarni. “The debt will remain even if he kills himself. In fact, how will the family manage financially without the man’s support.’’
FAMILIES FALL APART
MARCH 2004: Trader Ketan Anuwadia and his wife Keena killed their two sons, Rishi and Devansh, before committing suicide at their Kandivli residence. Ketan had run into losses of Rs 1.35 crore.
DECEMBER 2003: Santosh Surve, director of chit fund company Kalpavruksha Finance, shot dead his wife and two daughters before committing suicide at their Thane residence. He was unable to repay investors.
MAY 2003: Assistant police inspector Prashant Sawant shot dead his wife and son before committing suicide in their flat in Chembur. He was said to be depressed.
Borivli deaths: Brother, sis had 72 credit cards
The following news appeared in the Mumbai Edition of Times of India
Borivli deaths: Brother, sis had 72 credit cards
Nitasha Natu | TNN
Mumbai: Financial woes are being confirmed as the prime reason for the deaths of four members of the Borivli family whose bodies were found inside their rented flat on Sunday.
Suchitra Nair, 46, and her brother Sudhir Nair, 42, had taken nearly 72 credit cards from various banks and credit-lending institutes, police officials revealed on Monday.The duo had also taken a Rs 8 lakh loan from a private bank to start a business in agriculture and dairy farming. A suicide note found at the scene said, “We have taken the lives of our parents and then our own.’’ Police said Suchitra’s former colleagues have identified the handwriting on the note as hers.
The two are suspected to have hanged themselves at their residence in Ekta Woods after allegedly killing their parents, A K Nair, 81, and Shyamal, 70. However, the police have registered a case of accidental death.
Suchitra and Sudhir Nair had 36 cards each and had also taken a Rs 8 lakh loan
The question that begs to be answered is that were all the banks sleeping when they issued them such a huge number of credit cards?
Why did the banks not use the services of CIBIL before issuing such a large number of credit cards to the brother and sister duo?
Should the banks not be charged with Culpable Homicide not amounting to murder?
And, this is not a stray case, banks are distributing credit cards on a platter and then when they are about to fail, they rush for bail-outs.
Stupid bank, stupid bankers!
Friday, 10 October 2008
16-yrs RI for man in credit card fraud
TIMES NEWS NETWORK
Mumbai: A gang that used to duplicate international credit cards and use them for buying gold and electronics in several cities was convicted by a metropolitan court in Borivli.Jaidevsingh Dhillon (43), Putrasingh Mani (52) and Manojkumar Pillai (29) have been sentenced to 16 years’ rigorous imprisonment and have been asked to pay Rs 30,000 as fine. Dhillon has worked as a policeman in Malaysia, officers said. The two masterminds, Raju and Nandan, are believed to be in France.
According to the police, the racket had been going on from 2001 to 2003. The masterminds, Raju and Nandan, used a cardreader to transfer vital data from international credit cards on to blank cards which are easily available in the grey market. These duplicate credit cards were sent to Dhillon, Mani and Pillai, whose would use them for shopping in departmental stores.
In Mumbai, the duplicate cards were used to buy jewellery, consumer durables and electronics at Khar, Chembur, Ghatkopar, Mulund, Andheri and Malad. The gang also used them in cities like Chennai, Hyderabad, Delhi, Ahmedabad, Chandigarh and Vijaywada. “Genuine card-holders would be billed for the purchases made by the gang. The card-holders would inform their banks that such large purhcases were never made by them. Eventually, it was the card-issuing banks that incurred heavy losses,’’ said investigating officer Prakash Shishupal. The police recovered 14 duplicate international credit cards from the gang, besides two cellphone and Rs 8.5 lakh in cash.
In 2003, Dhillon jumpd bail and fled from the city. He then used some duplicate credit cards to purchase valuables in Chandigarh. Later, he changed his name and moved to Navi Mumbai where he ran a small hotel. For three years, he was on the run. In December 2006, the crime branch (unit V) managed to trace him and arrested him. “We recovered two television sets, computers, DVDs, printers and other valuables from Dhillon’s Malad office,’’ Shishupal said.
Mani and Pillai were convicted by a Borivli metropolitan court in August 2005. Dhillon was tried in the same case recently. Pillai also travelled overseas on a Canadian passport that he possessed in the name of Paul,’’ a police officer said.
Tuesday, 9 September 2008
SC refuses to allow high interest on credit cards
The following is report appearing in Mumbai Edition of Times of India dated 10th September 2008.
Dhananjay Mahapatra | TNN
NEW DELHI: Credit card users can breathe easy for the moment, with the Supreme Court refusing to stay a national consumer forum directive that banks cannot charge more than 30% interest per annum on defaults on card payments. This will protect consumers from exorbitant charges, which are as high as 49% in some cases.
Banks had appealed against the consumer court order and asked for a stay on it. Admitting appeals filed by MNC banks — HSBC, American Express, Citibank and Standard Chartered Bank — challenging the consumer forum order, a Bench comprising Justices B N Agrawal and G S Singhvi issued notice to Reserve Bank of India and the NGO 'Awaz', on whose petition the limit on interest rate was imposed.
What is revealing is the banks listing as many as 27 factors why they needed to charge higher interest rates and these included calls made from service centre to seek new customers. It would appear that almost all costs involved in banking activities over telephone and internet were to be charged to the hapless credit card holder, going by the banks' submissions to the SC.
When banks pressed for a stay on the ground that they are regulated by the RBI regulation guiding interest rates, the Bench merely issued notice on their applications and sought responses within three weeks.
But the threat of a higher interest has not gone away as the banks — HSBC, American Express, Citibank and Standard Chartered Bank — have teamed up to persuade the SC of what they said were their compulsions in charging between 36% and 49% interest.
The July 7, 2007 order of the National Consumer Disputes Redressal Commission (NCDRC) had ruled that "charging of interest rates in excess of 30% per annum from credit card holders by banks for the former’s failure to make full payment on the due date or paying the minimum amount due, is unfair trade practice".
It had also said that penal interest could be levied only once for the period of default and should not be capitalised, while also terming the practice of computing interest on monthly basis as "unfair trade practice". Among the factors listed by the banks justifying the exorbitant rates was the cost of calls. In other words, calls made randomly by the bank's authorised call centres incessantly to persuade people to take a credit card, is also taken into account for realisation through charging of penal interest from a defaulting card holder.
The other notable factors listed are:
Processing cost for setting up a new card in operating system
Cost of courier and cost of embossing the card
Cost of providing phone banking service
Cost of sending monthly statements
Cost of providing internet banking facility
Cost of waiving charges for service reasons
Cost of marketing and promotional offers
Cost of rewards and loyalty programme
"The National Commission has failed to appreciate that the rate of interest on defaulted or partial payments of dues is determined by taking into consideration various factors, including the risks of default, and therefore, this commission may not determine the issue as to whether the interest at the rates of 36% to 49% per annum is excessive," the banks said.
The original story appears here
Wednesday, 16 July 2008
Banks increase interest rate to 51% per annum on credit cards
Advisory on Credit Cards
Credit Consumers Association of India advises all credit card holders to exercise utmost caution in the matter of using credit cards.
All credit card issuing companies and banks have raised the interest rate on these cards to 3.15 to 3.5% per month translating to an annual compounded interest rate of 51%.
With credit card holders being asked to pay just 5% of the outstanding amount, the danger of negative amortization (your outstanding amount increasing every month even after paying 5% of the bill amount) has increased.
Illustrative Example
| Balance Outstanding | Bill Date | Outstanding | Purchase | Purchase Date | Payment Date | Payment @5% | Interest/Day | Days | Interest for the Period |
| 0 | 10/07/2008 | 0 | 2000 | 15/07/2008 | 20/07/2008 | 100.00 | 0.00 | 0.00 | |
| 1900.00 | 10/08/2008 | 1955.42 | 0 | | 20/08/2008 | 97.77 | 2.22 | 25.00 | 55.42 |
| 1857.65 | 10/09/2008 | 2010.83 | 0 | | 20/09/2008 | 100.54 | 2.17 | 30.00 | 65.02 |
| 1910.29 | 10/10/2008 | 2075.85 | 0 | | 20/10/2008 | 103.79 | 2.23 | 30.00 | 66.86 |
| 1972.06 | 10/11/2008 | 2142.71 | 0 | | 20/11/2008 | 107.14 | 2.30 | 30.00 | 69.02 |
Thus if you made a purchase of 2000/- and then kept on paying the minimum, your outstanding will actually increase instead of decreasing. This happens because the rate of interest is 3.5% whereas the rate of repayment of principal is just 1.5% of the total outstanding.
We request all credit card holders to
- Seek immediate help in case you are making just the minimum payments.
- Always make a payment of at least 10% of your outstanding amount.
- Make payments at least 3 to 4 days before the due date.
- Keep record of all payments made.
- Never make payments to collection agents as this involves collection charges.
- Keep your card usage below the credit limit.
- Carefully watch your card limit as your bank may suddenly and without notice decrease your credit limit and then charge you for over limit charges.
- When you go over limit, you do not have any grace period for payments. Make payments to reduce your outstanding below the credit limit and make payments before the bill generation date.
- Pay off the full amount on your credit card before the due date to enjoy 50 days of free credit.
- Refrain from using credit card for cash withdrawal as this attracts finance charges from the date of withdrawal and also any subsequent purchase also carries interest charges.
Monday, 14 July 2008
Credit-card debts may lead to plastic meltdown
Credit counsellors and financial analysts in the US and the UK are seeing evidence every day that credit card debts are increasing. Soaring fuel costs, rising food prices and climbing energy bills are all being kept at bay with credit cards. Shortfalls on mortgage repayments are also being made up with cash from credit cards. Many of these debt soaked consumers were already struggling to make their minimum monthly repayments.
More than $1 trillion is held on credit cards in America. In the UK, debts of more than pounds 50 billion have been run up on the plastic. Across the world, somewhere between $2-3 trillion is owed on credit cards.
Up to now, the credit crisis has passed by without plastic going into meltdown. Statistics have shown steady levels of arrears and suggested that many consumers have been successfully paying off part of their balances. Now there are increasing signs that this last breakwater, shoring up the economies of the western world, is about to crack under ever-increasing strains.
“Credit cards are definitely going to be one of the next big problems,’’ said Steve Nuttall, head of the financial-services research group at polling company YouGov. “Our research shows that everything started to fall off a cliff in about March or April and that should begin to show up in bad-debt charges by the end of the year.’’
The US Federal Reserve has also been warning credit-card lenders not to push their luck. The regulators are fearful that the economy could crack if consumers start being hit with higher fees and steep interest rate rises. The problem may be even sharper in Britain.
Analysts always say that “the markets get it right’’. Current market prices suggest that over 20% of the money owed on British credit cards is unlikely to be paid back. That would be almost three times higher than the previous record for bad credit-card debts, eclipsing the problems witnessed in the last housing crisis of the early 1990s.
“We are already hearing stories about people using their credit cards to keep up with their mortgage payments,’’ said Peter Crook, chief executive of Provident Financial, the doorto-door moneylender. “If that’s what’s happening, it’s a big red warning sign.’’ The recent Bank of England credit-conditions survey revealed that banks were surprised by the level of bad debts run up on their credit cards in the second quarter of the year. Demand for credit cards also increased as banks tightened their lending criteria across the board.
The UK’s debt-strapped consumers currently owe a staggering pounds 56 billion on credit cards. According to figures from Apacs, the payments network that supports the British banking system, this could climb to pounds 160 billion if those 31m cards are used to the max. The figure takes account of all the measures already taken by credit-card issuers to clamp down on borrowers by rejecting card applications and cutting credit limits.
YouGov’s research suggests that 15% of the British public is now behind on at least one bill of some kind or another. Of those in trouble, 38% say they are behind with utility bills or council tax, while 31% cite credit cards as their big problem.
Problems in credit-card debts have the potential to send a new wave of panic through global financial markets. Roughly $600 billion of debts run up on credit cards world over swill through the global financial system. Credit-card debts were packaged up and sold on by banks during the boom years, just like mortgages and car loans. THE SUNDAY TIMES
More than $1 trillion is held on credit cards in America. In the UK, debts of more than pounds 50 billion have been run up on the plastic. Across the world, somewhere between $2-3 trillion is owed on credit cards.
Up to now, the credit crisis has passed by without plastic going into meltdown. Statistics have shown steady levels of arrears and suggested that many consumers have been successfully paying off part of their balances. Now there are increasing signs that this last breakwater, shoring up the economies of the western world, is about to crack under ever-increasing strains.
“Credit cards are definitely going to be one of the next big problems,’’ said Steve Nuttall, head of the financial-services research group at polling company YouGov. “Our research shows that everything started to fall off a cliff in about March or April and that should begin to show up in bad-debt charges by the end of the year.’’
The US Federal Reserve has also been warning credit-card lenders not to push their luck. The regulators are fearful that the economy could crack if consumers start being hit with higher fees and steep interest rate rises. The problem may be even sharper in Britain.
Analysts always say that “the markets get it right’’. Current market prices suggest that over 20% of the money owed on British credit cards is unlikely to be paid back. That would be almost three times higher than the previous record for bad credit-card debts, eclipsing the problems witnessed in the last housing crisis of the early 1990s.
“We are already hearing stories about people using their credit cards to keep up with their mortgage payments,’’ said Peter Crook, chief executive of Provident Financial, the doorto-door moneylender. “If that’s what’s happening, it’s a big red warning sign.’’ The recent Bank of England credit-conditions survey revealed that banks were surprised by the level of bad debts run up on their credit cards in the second quarter of the year. Demand for credit cards also increased as banks tightened their lending criteria across the board.
The UK’s debt-strapped consumers currently owe a staggering pounds 56 billion on credit cards. According to figures from Apacs, the payments network that supports the British banking system, this could climb to pounds 160 billion if those 31m cards are used to the max. The figure takes account of all the measures already taken by credit-card issuers to clamp down on borrowers by rejecting card applications and cutting credit limits.
YouGov’s research suggests that 15% of the British public is now behind on at least one bill of some kind or another. Of those in trouble, 38% say they are behind with utility bills or council tax, while 31% cite credit cards as their big problem.
Problems in credit-card debts have the potential to send a new wave of panic through global financial markets. Roughly $600 billion of debts run up on credit cards world over swill through the global financial system. Credit-card debts were packaged up and sold on by banks during the boom years, just like mortgages and car loans. THE SUNDAY TIMES
Friday, 11 July 2008
Bad Karma catching up with MNC and Private Banks
A news report today in leading newspapers in Mumbai talks about CitiBank planning to sell its swank headquarters in BKC.
It is a typical case of bad karma catching up with the bank.
For years, Citibank and similar foreign and private banks lobbied with the mandarins in the law making institutions to offer products and services whose cost was way prohibitive for the common man.
They set up honey traps by offering easy credit through credit cards, personal unsecured loans and other such instruments where the interest rates were portrayed to be unregulated by the central bank. They charged interest in the region of 35 to 85% all in the name of unsecured credit.
These bank employed bright kids fresh off the MBA mill to sell these products and services. These kids were offered heavy salaries and pushed into achieving sales targets for the bank’s dubious products. To recover the small loans issued to masses, these banks hired dubious agencies purely on commission basis thus transferring the cost of their entire operation on the poor borrower.
Stories of mental, physical and financial harassment abound. Bank managers and officials ruthlessly went around first distributing money and then recovering these small loans.
Small borrowers, people who borrow 40,000 to 50,000 rupees (1000 to 1250 US Dollar) could be easily browbeaten into submission. Armed with a central bank looking the other way and legislators not bothered about the rape of the common man, these banks systematically looted the common man. Many were driven to commit suicide, many marriages went bad and many people’s families were destroyed.
All this has created a lot of ill will amongst the people and it is now translating to these very same banks facing collapse for deeds done by the managers who were supposed to make the bank grow. The sub-prime crisis in United States and its fall out on the world financial system is having its echo here in India too. These banks are now left holding the baby.
Soon these bank managers who were getting fancy salaries and perks will be also laid off. Banks like CitiBank will have no option but to cut all the flab. With share prices of the bank falling to 16$ from a high of 65$, it has already seen an erosion of 75% of its value. There is more to come from where all this came from and boy am I happy!
It is the bank’s bad karma that is catching up with them.
It is a typical case of bad karma catching up with the bank.
For years, Citibank and similar foreign and private banks lobbied with the mandarins in the law making institutions to offer products and services whose cost was way prohibitive for the common man.
They set up honey traps by offering easy credit through credit cards, personal unsecured loans and other such instruments where the interest rates were portrayed to be unregulated by the central bank. They charged interest in the region of 35 to 85% all in the name of unsecured credit.
These bank employed bright kids fresh off the MBA mill to sell these products and services. These kids were offered heavy salaries and pushed into achieving sales targets for the bank’s dubious products. To recover the small loans issued to masses, these banks hired dubious agencies purely on commission basis thus transferring the cost of their entire operation on the poor borrower.
Stories of mental, physical and financial harassment abound. Bank managers and officials ruthlessly went around first distributing money and then recovering these small loans.
Small borrowers, people who borrow 40,000 to 50,000 rupees (1000 to 1250 US Dollar) could be easily browbeaten into submission. Armed with a central bank looking the other way and legislators not bothered about the rape of the common man, these banks systematically looted the common man. Many were driven to commit suicide, many marriages went bad and many people’s families were destroyed.
All this has created a lot of ill will amongst the people and it is now translating to these very same banks facing collapse for deeds done by the managers who were supposed to make the bank grow. The sub-prime crisis in United States and its fall out on the world financial system is having its echo here in India too. These banks are now left holding the baby.
Soon these bank managers who were getting fancy salaries and perks will be also laid off. Banks like CitiBank will have no option but to cut all the flab. With share prices of the bank falling to 16$ from a high of 65$, it has already seen an erosion of 75% of its value. There is more to come from where all this came from and boy am I happy!
It is the bank’s bad karma that is catching up with them.
Subscribe to:
Posts (Atom)
