In a recent case a Mumbai resident had approached a new-age private sector bank for a credit card though she already holds a salary account with the bank. She needed a credit card india to book an online air ticket.
In spite of her request for a basic card, she was sold a platinum
version. Although, the bank executive had accepted that her designation did not
match platinum card criteria, he actually had requested her to wrongly fill for
the equal to platinum version in the application form. But she refused to bluff
and ticked for a basic card.
Unluckily, her request was rejected.
According to a former banker this extreme and unethical practice can be the
result of increasing pressure of obtaining terrific sales targets slapped on
sales executives and outsourced direct selling agents (DSAs). “In the race for
business, quality does not matter. Banks are aiming for the trouble.”
On
top of it the most difficult part and worrying on the consumer part is that such
a deal is difficult to prove as no written communication is involved. (A banking
ombudsman official highlighted that even if there have been some mischief on the
application form, final scrutiny of the applicant’s documents would have
revealed the irregularity.
This could have landed the applicant in
trouble.) But bankers are of a view that the rejection may be because of some
other unspecified reason.
However this is just an assumption, and there
lays the root of the problem—that banks are unwilling to look into exact cause
for rejection. For instance Mumbai applicant, for not given the cause for
rejection.
And that too in spite of a recent July 2008 RBI circular that
restated an earlier salvo—”banks should convey in writing the main
reason/reasons which have led to the rejection of the credit card applications”.
In another instance, a DSA again of the same new-age private sector bank
tried to pass off a platinum card, to a Mumbai media person. “I wanted a gold
card because it suits my requirements and offered discounts on groceries
etcetera. But a few days ago, I received a vague mail saying my application had
been rejected. It looked like a computer-generated response.”
The letter
sent by the bank did not give out specifics for rejection, except it stated that
the application did not meet the bank’s internal credit policy “based on a
combination of financial and related criteria and/or statistically determined
scores to assess credit eligibility”.
Also on the basis of a combination
of verifications, credit bureau reports and document verifications. After this
mail the consumer is confused about the credibility of rejection and is worried
that the refusal might affect her future credit chances.
A senior banker
who sees credit cards segment but does not wish to be identified insists that
such a mail is not “very vague”. A bank will not give details of its internal
evaluation criteria for credit. The reasons for rejection can be low income, not
owning a house, living in a wrong locality to default on previous loans.
“But if a customer is on the Cibil (negative credit repayment history)
list, we will clearly communicate.” Cibil or the Credit Information Bureau
(India) collects
and distributes an individual’s credit data across financial institutions.
If a card issuing-bank rejects an application, neither RBI nor the
ombudsman can interfere. “It is the bank’s prerogative,” says a senior banker,
“It exercises due diligence as a credit card is much more risky. It is a free
loan for 50-52 days.”
Sanjeev
Talwar of the Delhi-headquartered National Consumer Helpline, a project
supported by the ministry of consumer affairs, has advised consumers from now to
ask for and retain a written proof like a receipt of application as there have
been instances where an application is rejected after an applicant has submitted
his important documents, including PAN card. “The documents could be
misused.”
