MEMORANDUM SUBMITTED TO THE GOVERNOR, RESERVE BANK OF INDIA , CENTRAL OFFICE, MUMBAI, THROUGH THE REGIONAL DIRECTOR, RESERVE BANK OF INDIA , NRUPATHUNGA ROAD , BANGALORE , ON 12.11.2008 AFTER THE PROTEST DHARNA HELD INFORNT OF MAHATMA GANDHI STATUTE, M.G. ROAD , BANGALORE .

After our continuous struggle we were able to make the RBI to form guidelines for the credit card business. The credit card charges being suppressed at the point of transaction to be throttled in later on statements in the boiler rooms of the banks. Showing all charges at the point of transaction will be in violation of the provision of the Constitution of India for Right to Choose. RBI has failed to crack the whip on erring banks as they continue to wreck havoc on credit card holders by charging exorbitant interest rates on credit card dues. The rate of interest was 36% and as of today it is 42% plus surcharges, the banks have now decided to hike it to 50%. RBI had early this year decided to crack down on banks that charge excessive interest rates on credit card dues, by issuing a circular, which mandates the bank to publish the upper ceiling of charges by the end of August. The apex bank has now noted that “rates of interest beyond a certain level may be seen to be usurious and can neither be sustainable nor be conforming to normal banking practices.” Further, various charges are levied by banks such as dues, late fees, cash advance fees, walk-in-charges etc. and the charges vary from bank to bank and range from 30% to a whopping 51%. For instance, banks charge credit card holders who avail of cash advance service anything between 26% to 46%interest on the amount taken and credit card holders continue to be charged this interest as this transaction is settled only after all other credit card purchases are settled.

OUR MAIN DEMANDS

1) REDUCTION IN RATE OF INTEREST:

Now, the Prime Lending rates of interest has considerably reduced and the Banks choose the reduce interest rates on loans. But, so far, none of the credit card issuing company has come forward to reduce the rate of interest on credit cards. Therefore, we demand the RBI to invoke the provisions of its supervisory powers and direct the credit card companies to reduce the rate of interest at least to the level of 18% p.a.

2) REDUCTION OF SERVICE CHARGES, ATM SERVICES ETC,

The service charges and other charges used different nomenclature are not inconformity with the actual expenditure incurred. The Banks are loading huge margin on these charges, which, some times, 3-4 times more than the rate of interest and actual charges incurred by them.

3) ABOLITION OF OVER LIMIT CHARGES, LATE PAYMENT CHARGES, & OTHER HIDDEN CHARGES:

The over limit charges are levied not because of the over usage of the limit. It is because of various charges levied by the Financial Institutions. This charge is not at all justifiable as the Financial Institutions never allow over drawing in the limits over and above the agreed limit. Secondly the late payment charges have no place in the reducing balance method of calculations of interest, as the calculations are automatically made for the delayed period on number of days products. Thirdly, the hidden charges are not authorized or agreed by the card holders or customers. The Financial Institutions cannot levy these charges which against the Indian Contract Act.

4) TO FORM A COMMITTEE TO GET REFUND OF THE VARIOUS ILLEGAL CHARGES UNAUTHORISEDLY LEVIED BY THE FIIs.

A case has been registered by the M.R.T.P. COMMISSION, New Delhi and ordered of investigation by the Director General of Investigations and Registrations, Government of India, New Delhi . The DGIR was directed to produce the Investigation Report by 14.11.2008. It is reliably learnt that they could not complete the report due non-availability of infrastructure. We are ready to with draw the case, provided the RBI forms a committee to look into the matter.

5) TO STOP PSYCHO-TERRORISM:

“Psycho-terrorism” word aptly used for the illegal recovery methods adopted by the Financial Institutions. Though the RBI, BCSBI and IBA are issuing guidelines, none of the Financial Institutions are following these guidelines. Large number of specific reports are available through out the country in the Media & Press, apart from our representations to the Government and RBI. Even though the BCSBI has issued Code of Conduct for the recovery of dues and repossession of securities, the Financial Institutions hardly follows the Codes and guidelines. As a Association we cannot go on filing cases against the for each and every wrong. Then we have to file at least 100 cases a day. As a Voluntary Association, it is impossible. We have come across Financial Institutions spending huge money towards legal expenses by using the public money by making appeals after appeals against the customers. The guidelines are there only on paper and the Financial Institutions undertaking to follow the guidelines in writing but in practice they are thrown to the winds. As we failed to get response from the controlling authorities, as a final step, we have asked all our members to apply “ Newton 's 3 rd Law” i.e. For every action, there is equal and opposite reaction. There is no need to explain the method used by the Financial Institutions. It is in the interest of all, firm action needs to be taken against the erring Financial Institutions. Otherwise, there will be street fights.

6) TO EXCLUDE HOUSING LOANS FROM THE PURVIEW OF SECURITISATION ACT.

The Housing Loans are granted for the purpose of construction of houses or purchase of houses for dwelling purposes with long repayment period. If the prudential norms are applied and make the 3 EMIs default as NPA and thereby invoke the provisions of the SARFAESI Act, the hardship, loss and injury cannot compensated in terms of money. We have come across many cases where Financial Institutions failed to sell the properties and load all the maintenance other incidental expenditure to the loan account, which, sometimes, more than the loan amount. Therefore, it is wise to exclude these housing loans from the purview of securitization Act at least up to Rs.25.00 lakhs, it will relieve genuine middle class salary earners losing their properties and life time earnings.

7) WITHDRAW FALSE CRIMINAL CASES FILED AGAINST CUSTOMERS.

Recently, the High Court of Judicature at Madras , stayed 24760 criminal cases filed the various MNC Banks and Financial Institutions. The Hon'ble High Court also passed severe comments on the functioning of the Reserve Bank of India and the MNC Banks. The copy of the Order is enclosed herewith for your kind perusal . In view of the said order, it is imperative on the part of the RBI to initiate action against the Banks named therein.

8) TO NEGOTIATE & SETTLE THE MATTERS THROUGH THE ASSOCIATION IN ACCORDANCE WITH THE LAW.

Both the CCHAI & FCAI are voluntary registered Associations helping the their matters to settle their grievance amicably with the Financial Institutions and also providing free legal services in matter of court cases etc. The Depositors are “Seeds” and the Borrowers are “Water and Fodder” to grow the Seed . With out the hard work and efforts of the borrowers, the Financial Institutions cannot grow. As the representatives of borrowers, we have better say in the matter pertaining to the borrowers and their grievances. Therefore, we demand to include the Officer Bearers of our Association in the matter policy decisions on the borrowers, as the RBI had given representation only to the depositors.

Our motto is to bridge the gap between the customers and financial institutions. We have already amicably settled individual cases to an extent of 80% of our members. Still new members are being enrolled with different types of problems. Therefore, We appeal to you sir, to look into the genuine grievances of the credit card holders and borrowers of financial institutions. We will be at your service in resolving the issues.

B.N. MANJUNATH C. V.GIDDAPPA PRESIDENT GENERAL SECRETARY

PRESS REPORT 12.11.2008 for FAVOUR OF PUBLICATION

After our continuous struggle we were able to make the RBI to form guidelines for the credit card business. The credit card charges being suppressed at the point of transaction to be throttled in later on statements in the boiler rooms of the banks. Showing all charges at the point of transaction will be in violation of the provision of the Constitution of India for Right to Choose. RBI has failed to crack the whip on erring banks as they continue to wreck havoc on credit card holders by charging exorbitant interest rates on credit card dues. The rate of interest was 36% and as of today it is 42% plus surcharges, the banks have now decided to hike it to 50%. RBI had early this year decided to crack down on banks that charge excessive interest rates on credit card dues, by issuing a circular, which mandates the bank to publish the upper ceiling of charges by the end of August. The apex bank has now noted that “rates of interest beyond a certain level may be seen to be usurious and can neither be sustainable nor be conforming to normal banking practices.” Further, various charges are levied by banks such as dues, late fees, cash advance fees, walk-in-charges etc. and the charges vary from bank to bank and range from 30% to a whopping 51%. For instance, banks charge credit card holders who avail of cash advance service anything between 26% to 46%interest on the amount taken and credit card holders continue to be charged this interest as this transaction is settled only after all other credit card purchases are settled.

OUR MAIN DEMANDS

1) REDUCTION IN RATE OF INTEREST:

2) REDUCTION OF SERVICE CHARGES, ATM SERVICES ETC,

3) ABOLITION OF OVER LIMIT CHARGES, LATE PAYMENT CHARGES, & OTHER HIDDEN CHARGES:

4) TO FORM A COMMITTEE TO GET REFUND OF THE VARIOUS ILLEGAL CHARGES UNAUTHORISEDLY LEVIED BY THE FIIs.

5) TO STOP PSYCHO-TERRORISM:

6) TO EXCLUDE HOUSING LOANS FROM THE PURVIEW OF SECURITISATION ACT.

7) WITHDRAW FALSE CRIMINAL CASES FILED AGAINST CUSTOMERS.

8) TO NEGOTIATE & SETTLE THE MATTERS THROUGH THE ASSOCIATION IN ACCORDANCE WITH THE LAW.

We have submitted a Memorandum with details covering the above demands. The copy of the same is enclosed herewith for your immediate reference.

B.N.MANJUNATH C.V.GIDDAPPA

PRESIDENT GENERAL SECRETARY