Why Delhi High Court granted Rs 1 lakh award in credit card case, asked RBI for stricter norms

Directions to RBI

1) Ensuring all complaints filed by the customers are not rejected simply by a mechanised process. If there are any mistakes made by complainants, an opportunity ought to be given to them to correct any errors or mistakes.

2) Issues which ought to be resolved at the level of the ombudsman of the RBI to be resolved at that stage itself and for the said purpose, if any strengthening, expansion or supplementing of the human resource at the ombudsman’s office is required, the same will be undertaken.

3) Whenever the complaints filed before the RBI ombudsman are finally rejected, the same will undergo a second level human supervision process, by trained legal personnel for e.g. retired judicial officers, lawyers, etc., who are legally trained for at least ten years, so that complaints are not rejected due to small errors.

4) RBI to issue directions to all banks regulated by them to create a flowchart in the complaints tab on their respective websites where the manner in which a customer can register a complaint with the customer care executive, branch manager, as well as the nodal officer can be communicated to the customers.

5) The ombudsman to ensure all banks and financial institutions clearly reflect on their respective websites, the hierarchy of all such officers who deal with consumer complaints, in the form of a flowchart.

The order further noted that the purpose and intent of all financial regulatory mechanisms should be to have adequate safeguards to avoid misuse, take stringent actions against perpetrators, and ensure that innocent credit card holders are not made to undergo harassment and frustration by incessant emails, messages and demands.

Case

The petitioner, who is an advocate, alleged that he was issued a credit card by his bank without any request made from his side. It was further stated that he had also raised a complaint on the customer care number of the bank with respect to the issuance of the credit card. However, the credit card statement that was sent on his e-mail showed a debit of an amount of Rs 76,777. It was contended by the advocate that the said transaction was never undertaken by him.

It was submitted that the bank continued to levy interest and penalty on the allegedly fraudulently debited amount from the credit card.

He submitted that despite an order of “no coercive action against the petitioner” passed by the court, a demand notice was sent by the bank and he received several calls from the bank for the payment of late payment fee and penalties.

Aggrieved by this, the advocate filed a contempt petition. Following this, the bank had agreed to reverse all the charges. In its order dated July 10, 2023, the court recorded that the Bank had reversed the amounts and the contempt proceedings against the bank were discharged.

Findings

The court noted a factual analysis of the alleged transactions can’t be undertaken in the petition. The court however held that the recovery agents did send threatening messages.

It also added, “even if there has been an inadvertent sharing of an OTP or a password by any credit card holder, there ought to be some mechanism by which the consumer would be able to immediately contact the concerned bank for blocking of credit card.”

The court held that charging of late payment of fee, interest, etc., in such cases when customers have lodged complaints and that too without resolving the same, should not be allowed.

The court noted that the plea for refund has been resolved as the bank has recredited the amount to the petitioner. Further, he had sought restoration of his CIBIL score and for restraining the bank from charging any penalty charges.

“No payment of late fee, interest charge, or any amount in respect of the said amount shall be charged by the Bank. The CIBIL score of the Petitioner shall not be changed merely based on the disputed transactions and the same shall be restored, if there are no other grounds for changing the score,” the court ordered.