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Corporate Jun 12, 2013

Goof up: HDFC bank deducts Rs 1.4 lakh for a card that was never delivered

By Bindisha Sarang

HDFC Bank was directed by a consumer forum in New Delhi on Tuesday to pay Rs 50,000 as compensation to one of it's account holder.

What happened: The bank had deducted money from Sunil Kumar Kushwaha'saccount for the usage of a credit card that was never delivered to him though the bank did refund the amount after almost a month. In fact, it was the bank which had mistakenly delivered the card to an incorrect address, and later deducted the due amount from his account without even giving him a notice. Since he never received the card, the charges which were made on the card were made by someone else.

And even though the card was used by someone else, he got threatening calls from collection agents, despite his explanations. Then HDFC Bank deducted an amount of over Rs 1.35 lakh from him, he had alleged.



The forum also observed that since banks are custodians of public money, such action of HDFC was "highly objectionable, illegal and condemnable" and the complainant is entitled to be reasonably compensated for that.

HDFC in its written statement had refuted the allegations made by Kushwaha.

Important things to remember: In fact, that's why Firstpost has been saying for a while now that having a credit card with your own bank may be a bad idea. Of course, having a credit card with the same bank you have a savings account with, makes it very easy to pay the bill. Not to mention, that when you have more than one banking relationship with a particular bank, you usually enjoy some unwritten benefits. But, as they say- every coin has two sides; whereas on one hand you get convenience, on the other hand (in case you fail to pay the bill), you may face a pretty tough situation. And in such a case, having the same banks credit card can turn out to be a costly affair.

Right of Lien: Reason being, three words "Right of Lien." Let's be honest, neither do we have the time nor the patience to read the credit card's Terms and Conditions (T&C). "Right of Lien" is one such clause mentioned in your cards T&C, which you agree upon (without even reading) when you agree to accept (use) the card.

In lay terms, Right of Lien is a right which a bank has to recover dues from your savings banks account for any unpaid credit card or unpaid loan. This right is a legal right and falls under Indian Contract Act. As far as your bank goes, this right permits the bank to sell your goods and securities when you do not settle dues. When you accept to use the card, this right gives the bank the right to freeze your savings accounts and deduct the credit card dues from your savings account, in case of default. Of course banks are supposed to give you a notice before you they do so.

Today more and more people are using credit cards to shop online, pay utility bills and buy movie tickets. Let's not forget that online credit card frauds are increasing each day (India being one country which has maximum number of online credit card frauds), there is a good possibility that you might have a dispute about a bill or transaction with your bank on your card. When you find yourself in such a place, and you don't pay the disputed amount, your bank might just freeze your savings account and recover the dues.

We suggest you visit your bank's website and read the T&C's. Ensure you pay your bills on time, use caution while shopping online (one major reason for disputes is online transactions) and avoid taking future cards ffrom the bank you bank with.

Sunil Kumar Kushwaha was lucky that the consumer forum ordered HDFC bank to compensate him Rs 50,000. But without a doubt this issue might have been an uphill fight. May be it was a genuine mistake from the bank's side, but with the number of frauds happening these day, you surely don't want banks to deduct funds from your account for disputed card amounts. Hence, best to not have the same bank's credit card where you have a savings account. And let's hope that banks will learn to send cards to correct addresses in the future.

With PTI inputs

by Bindisha Sarang

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