K. Vijaya Bhaskara Reddy

The client was pestered to pay the dues, which were already cleared by her

The penalty was confined to Rs. 50,000 by the State Consumer Disputes Redressal Commission

HYDERABAD: The State Consumer Disputes Redressal Commission has categorically ruled that banks using recovery agents and calling to the numbers that were covered under ‘National Don’t Call Registry’ was illegal.

Employing agents for loan recovery created quite a furore in the recent past after it drove some people to commit suicide. On Sept.17, the Commission fined SBI and SBI Cards and Payment Services Pvt. Ltd., a non-banking financial company affiliated to the bank, for harassing a customer through recovery agents and intimidating her by phone calls, despite timely payment of her credit card dues. K. Sandhya Rani, a Gynaecologist at Banjara Hills, took an SBI credit card in 2002. She later found that the bank was collecting extra charges ranging from Rs.1,200 to Rs.1,500 every month, notwithstanding her in-time clearance of dues.

She could not get credit card statements to her changed address even after she communicated it to the bank. In Oct., 2006, the bank informed her that the card facility had been withdrawn and she needed to pay the outstanding balance of Rs.40,302. She replied to the bank saying that she had paid off the entire amount and would not like to have their service any more. Ignoring her reply, the bank’s recovery agents started threatening her directly and through phone calls. Learning that the bank had entrusted the credit card division to an unofficial agency, she sued the agency, the bank and the RBI in Hyderabad District Forum- III, demanding a compensation of Rs.4.99 lakh for causing mental agony. The District Forum found fault with the bank and its agency and ordered to pay her punitive damages of Rs.50,000, compensation of Rs.30,000 and Rs.2,000 for court costs. The agency contested the verdict in the State Commission.

The RBI, second respondent in the case, said that the credit card agency was an NBFC and it was supposed to follow their Fair Practices Code (FPC). According to which, the NBFCs should mention the interest rates explicitly and send statements to the customers regularly.

The Commission found that the agency disobeyed the FPC and also faulted it for its acts of intimidation. However, it amended the District Forum’s verdict and confined the penalty only to Rs.50,000.