MUMBAI: In a move that will bring relief to credit card holders, RBI has told banks that they can charge late fees only in the next billing cycle following a missed payment. At present, card issuing banks charge a late fee for any payment made after the due date.
The late fee imposed by card issuers ranges between Rs 100 and Rs 700, depending on the outstanding amount. For amounts above Rs 20,000, most banks charge a late fee of between Rs 600 and Rs 700. Most utility providers like electricity and telecom companies charge customers if they miss the due date. However, in the case of credit card payment the issuers charge interest for the delayed payment and in addition to this they charge a late fee payment.
This had led to a lot of heartburn among customers as they ended up paying both late fee and the interest even if they made the payment before the next bill was due.
Speaking to TOI, Pallav Mohapatra, CEO of SBI Cards, confirmed that RBI has asked banks not to impose late payment charges if the cardholder had paid before the next billing but after the due date. “It is possible that the regulator must have felt that since the cardholder is not being considered a delinquent until the next bill is unpaid, the penalty should not be charged,” he added when asked about the rationale
In December 2013, RBI had directed banks’ credit card accounts to be treated as delinquent (a non-performing asset) only if the minimum amount due, as mentioned in the statement, is not paid fully within 90 days from the next statement date. The gap between two statements should not be more than a month.
Before that, some banks took the due date specified in the statement for payment of minimum amount due to determine the overdue status while others used the subsequent billing date to determine the over-due status.
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Courtesy: Times of India