In the wake of the global economic crisis, it is important to note that banks in India are not very stringent in terms of assessing the credit worthiness of people before doling out plastic money.
The credit card outstanding dues with all banks amounted to Rs 26,596 crore (Rs 265.96 billion) as on May 13, 2008.
It's only when defaults start rising that banks sit up and take notice. Many a times, a card may be misused by someone else taking the 'defaulter' by surprise. Despite the RBI's strict guidelines on issuance of credit cards, the problem persists and complaints continue to pile up against banks.
The central bank guidelines provide that any loss arising out of misuse of such unsolicited cards will be the responsibility of the card issuing bank only and the person in whose name the card has been issued cannot be held responsible for the same, Chidambaram said in the Rajya Sabha.
He added that an RBI circular issued earlier advised banks that unsolicited credit cards should not be issued. So what happens if such a card is issued?
Image: A customer checks cash at a bank. | Photograph: Raveendran/AFP/Getty Images
Also read: Credit cards: What the banks must do
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