Saddled with unsolicited loans, cards?

In case of dispute, don't suspend payments to banks because it will reflect badly on your credit history

Credit card customers often find themselves in situations in which they have been issued add-on cards or their spends have been converted into equated monthly instalments (EMIs) without their consent.

Anita Verma, was sent a letter by her bank saying that her credit card spending on a mobile had been converted into EMIs. When she called the bank, they initially tried to convince her that she must have clicked on the option but when she insisted, they asked to pay the first instalment and the processing fee. Tired with the amount of time being spent on the calls, she finally decided to take the offer and is now paying in instalments.

Online loan and credit card comparison firms say such disputes are on the rise. But they add it's difficult to say whether it's the customers' fault or the banks'. Rishi Mehra, co-founder, deal4loans.com, points out that there are incidents where banks send unsolicited add-on cards to existing customers. These are often free in the initial years after an annual fee is charged. Only when banks start charging, they realise it was not free. In other cases, existing personal or consumer durable loan customers have received cheques from lenders stating it's a pre-approved loan they can avail.

If banks convert your purchases into EMIs or send unsolicited add-on cards, experts suggest it's always better to pay those charges after raising the queries with banks. "The banking regulator is serious about lenders flouting its norms. If it's clearly not customers fault, in all probability he or she will get justice. Charges wrongfully levied on them will be reversed," says Harsh Roongta, director, Apnapaisa. But if they don't pay and wait for the outcome of the dispute, they would be reported as defaulters to the credit bureau and that can hamper their chances of getting a loan or credit card.

Through a circular in July 2013, RBI warned banks against sending unsolicited cards and loans to customers. It has clearly said not only will banks need to reverse the charges, if such a case is proved against them, but also pay a penalty for the act.

In such cases, mere calling of the helpline number is not enough. Experts suggest customers send an email and wait for the response. If not satisfied, V N Kulkarni, chief counsellor, Bank of India-backed Abhay Credit Counselling Centre, says the customer should write to the nodal officer. Email addresses of these executives are available on each bank's website. If your case is still not resolved for 30 days, the person should write to the banking ombudsman. If a bank agrees to act in your favour, do ask for a written letter that mentions the credit card is surrendered or EMI charges are reversed.