Why credit card bills have many fees

New Delhi: Are you tired of the many late fees and fines that your bank charges you on your credit card account month after month? Have you incurred financial losses because of delay in delivery of bills or late realisation of cheques towards payment?

At times, you may have almost felt that there was something fishy about this whole business, haven't you? Even the Monopolies and Restrictive Trade Practices Commission (MRTPC) seems to share your thought.

Alarmed by reports that credit card companies have collected over Rs 6,000 crore in a decade from customers by way of such fines and late fees, the anti-monopoly watchdog recently ordered a probe by the Director General of Investigation and Registration (DGIR) into the fees levied by credit card companies.

A preliminary report of the probe now says Citibank, HSBC, ICICI Bank and HDFC Bank have all violated norms by adopting unfair practices for selling credit cards.

In the report, DGIR has found that these banks made false promises to their credit card customers and caused loss to the general public by violating the rules framed by the Reserve Bank.

The report has also alleged that the banks delay delivery of bills and realisation of cheques towards payment just to charge increased interest rate, late fee and fines etc.

Earlier reports suggested that credit card issuers in India extracted more than Rs 6,000 crore from their customers as late fee, cash, advance fee, billed finance fee, over-limit fee, cash withdrawal fee, insurance charges, cheque pick-up fee and service taxes during the past 10 years.

The DGIR has also found that banks were doing credit card business in the country through Direct Sales Agents, who were working either as independent contractors or on commission basis.

DGIR would now direct these banks to furnish details of their income during last three-four years derived from other than the credit limits (extra charges), the sources added..

The MRTPC initiated judicial enquiry against HDFC on November 10 last on the same grounds. The sources said enquiries against American Express Bank, ABN Amro and country's largest lender State Bank of India on the same issue are also going on.

(With agency inputs)