Credit Card Guide for different types of cards Part-I

Before we apply for a credit card it is always better to know what type of credit card is best suited to our profile. Catering to different type of consumer needs, credit card companies issue several types of credit cards. Each type has its own benefits. Here we present a brief description of popular types of credit cards issued banks and financial institutions in India.

Regular Credit Cards
This is the most basic type of credit card. It has a low credit limit and the most basic status among various credit cards. Credit card companies can club various other reward programs like travel rewards, cashback offers etc to enhance its value and appeal to customers.

Silver Credit Cards
Silver credit cards have higher eligibility criteria than regular credit cards. They bring more card member benefits to the customers, and have higher credit limits than regular credit cards. For example the ICICI bank Silver credit cards have the following income requirements Rs. 60,000/- p.a. for salaried individuals and Rs. 50,000/- p.a. for self-employed persons. The credit limit on these credit cards range from Rs. 40,000 to 80,000.

Gold Credit Cards
Gold credit cards have a higher status and credit limits than silver credit cards. Needless to say these types of credit cards have higher income requirements as their eligibility criteria. For example ICICI Bank Gold cards have income requirements as Rs. 1,20,000/- p.a. for salaried individuals and Rs. 1,00,000/- p.a. for self-employed people, while HDFC bank gold card are issued to those with a minimum income of Rs 2,00,000/- p.a. if you are salaried and Rs. 150,000/- p.a. if self employed. In addition to the regular benefits banks extend special privileges to their gold credit card holders.

Platinum or Titanium Credit Cards
These types of credit cards bring more benefits to credit card holders than regular, silver or gold credit cards. These credit cards generally have platinum or titanium hue and are issued to a select class of clients who have excellent financial background and good income levels. Platinum credit cards have personal concierge services, in addition to exclusive platinum benefits.

Signature Credit Cards
A league of its own, The Signature Credit Cards usually have no pre-set spending limits, personal concierge service, signature travel, lounge and membership benefits. Offered to a very elite group these credit cards, requires an excellent financial status. On June 9, 2007 ICICI bank introduced the Visa Signature Card and became the first credit card issuer in India to launch a premium credit card. This credit card has a joining fee of 25000/- and an annual fee of 2500. The exclusivity of this signature card is exemplified by the statement "The ICICI Bank Visa Signature Credit Card allows the card member to experience a life like no other, the Signature life. Card members can enjoy an exclusive bouquet of offers and benefits valued in excess of Rs. 50,000/- including an attractive Tag Heuer watch or travel vouchers for destination of your choice, besides a Rs. 3 crore air travel insurance cover".

Credit Cards by Invitation Only
The elitest of the elite, no one can apply for these credit cards. For example, the American Express Black Credit Card, popularly called the Centurion Card, is issued by invitation to the most exclusive and elite, to those who spend a certain minimum amount (which can run into crores of rupees). These cards have huge annual fees and minimum spending levels. In fact these credit cards are so exclusive, that they have an aura of mystery surrounding them and are considered as status symbols.

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Credit card recoveries: and Your Rights Part-III

Tracking consumer ignorance
Lodging a police complaint did cross Amit Khanna\'s mind, when he first started getting threatening phone calls from a collection agent. Khanna is a thirty-year old banker who got into this turmoil, because his office and billing address shifted eight months ago. His credit card issuer, ABN AMRO Bank, was notified about the change, but he still received an overdue payment after two months, for Rs 3000. When he informed the bank of the statement, they asked him to pay up first, and the matter would be sorted out later.

Khanna told "I refused. After three to four months, they started making calls both at my home and in office. Then, about one to two months back, the calls became abusive, and they started harassing my family members. They were very rude and you could tell they were gundas."

The state of consumer helplessness is apparent when it is clear that even someone like Khanna, who is in the banking profession, is not aware of the PIL before the Bombay High Court. He says, "I did consider taking them to court, but I did not in the end, because of a lack of both time and contacts. I don’t plan to waste any money on this. If something is already going on, however, I do not mind taking a part. Thankfully, the calls have stopped now. The main thing I am worried about is that I now have a spoilt credit history, perhaps with other banks as well."

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Credit Card Recoveries: and Your Rights Part-II

A code that works?
H N Sinor, CEO of the Indian Banking Association, IBA, says that the IBA is working with the RBI on a comprehensive code of conduct for the proper recovery of dues by banks. "The key thing for credit card issuers is to upfront tell the customer how we will behave with the customer, so that customers are not taken by surprise later on and there are no hidden costs. The code will say that we will be following some fair practice and we will inform the customer of the positives and negatives of a product upfront. It says, that we will deal with customers with dignity and respect with respect to debt collection and follow the persuasive method, not the coercive method," he told.

Proposals to clear the mess:

1. More stringent credit risk analysis by banks.

2. Get the Code of Conduct in shape

3. Get it enforceable by the RBI and the courts

4. Draft a comprehensive law based on the US FDCPA

5. Authorise the banking ombudsman to mediate in collection disputes.

6. appoint more judges and speed up the judiciary process for speedy redressal of disputes

The recovery of credit dues is a delicate problem, because of the phenomenal growth the sector has seen since 1999, when Citibank first started issuing credit cards in India, to the present day, when there are more than 10 million cards circulating throughout the country. While the credit card market is estimated to be growing at a rate of 30%, by 2010, it is expected that there will be more than 35 million cards in the country.

Sarvesh Swarup, Country Business Manager, Global Consumer Group, Citigroup told Moneycontrol.com, "The RBI has set up a working group with the IBA on credit cards. A regulatory body did not happen much earlier, because the market was very small to begin with, there were less players (banks) and cards were still considered elitist."

New ways to make collection easier
The IBA and the RBI are now also considering getting the banking ombudsman in the act. Sinor said, "Apart from the channel within each bank to redress grievances, we are trying to work out whether the role of the banking ombudsman, who was earlier not taking up these cases, can be extended. So perhaps in a short time we will see the banking ombudsman as an agency where a customer can take their grievances to, apart from the bank itself."

However, if the state and central governments step in to speed up the civil judicial procedures, this would also prompt banks to approach the courts for claiming recoveries, rather than appoint a recovery agent, Manshinde says. "This can be done by speeding up the machinery appointing judges. There are so many state-controlled banks out there, so the government should take corrective measures to speed up legal recoveries. Then there would be a summary procedure for recoveries in place," he said.

Till such a time, it would seem that banks should carry out their risk-analyses on prospective customers more exhaustively, to reduce the occurrence of such future default-and-chase scenarios. Manshinde says, "The banks are very keen to get into the credit market, and that is why we receive so many calls from them, chosen to be lucky ones who benefit from their cards. When they get their customers, they should be more careful to verify their risks. But they are not careful then, and give \'free cards\' to everyone. We are seeing the result of that."

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Credit card recoveries and Your Rights! Part-I

It may seem like a bad movie, but when you start getting calls threatening your life and security, it seems unfeasible that a credit card could bring you so much grief. With banks getting tougher on credit card defaulters, it is a surprise that consumers have not yet woken up to the fact that they can take action against banks that cross the line between getting their dues back and plain harassment.

How to react if you've received a call:
1. call up the bank and complain bitterly.
2. Threaten litigation if need be.
3. Go to the nearest police station and file a complaint.
4. Take precautions against further calls - keep a tape recorder handy. In the tape, try to get the agent to clearly say what he wants from you, what bank he is from.
5. you can sue the bank individually, if you have the resources.
6. If you do not want to get involved personally, approach a consumer action group.

Criminal lawyer Satish Maneshinde says, "I would call this extortion. What is the difference between banks going to recovery agents and businessmen going to underworld, then? No law permits any bank to appoint people to recover their loans through these methods. All they can do is shift their account, or initiate legal action to recover dues. Receiving a threatening call is a criminal offence. The person threatened must go to the nearest police station and lodge a threat complaint."

According to Maneshinde, in case of harassment by a recovery agent, hired by a lender, a person may approach the courts. But this rarely happens. "It is very difficult for individuals to come to the courts and take the issue. In a large number of these recovery companies, there are retired police officers of the rank of Inspector-General on the board or their relatives are employees of these companies. So there is a direct nexus. If a person claims there have been threats against him, beyond the law, he must be able to prove it. Individuals must record the calls and get evidence. But there is the infrastructure lacking. There is the greater visibility a consumer action group has," he says.

Currently, a public interest litigation case filed by Mumbai-based Consumer Action Network, CAN, is pending in the Bombay High Court, which wants it declared illegal and criminal for lenders to employ "outside agents" to recover dues using strong-arm methods. The court directed the banks against which the PIL is aimed at to submit a list of their collection agents. Coming into the petitions' net are several majors, like Citibank, Standard Chartered Bank, American Express Bank, ICICI Bank and even the RBI.

Other than to approach the courts, a harassed consumer has little recourse, in the absence of a comprenhesive law or a strong regulator, and only 'guidelines' by individual banks to deal with recoveries. Collection is governed in part by laws like the Banking Regulation Act, the Negotiable Instruments Act and the Contract Act, but there is no specific law at play. While the IBA has had a 'guideline' in place for the proper collection of debts for the last two years now, which forbids the use of threats, this has not held much sway.

In the US, the Fair Debt Collection Practices Act, FDCPA, clearly lays down the ground rules for collection agencies and attorneys, though it says nothing about the lender. An agent is prohibited from inundating you with phone calls at your workplace or at home, publicising the debt situation, threatening you, or spreading falsehoods about you.

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