Credit Card service denied- Legal solution?
Sir/Mam, I have a friend practicing as a lawyer in the High Court of Madhya Pradesh at Jabalpur. He has an account in the HDFC Bank and is a Priveleged Banking Customer there. He has a good established practice and was willing to get a credit card. He go a "pre-qualified offer" in his net-banking bank account from the bank, providing for a credit card. My friend applied for the same online and the application got submitte dto the bank's corporate office at Bombay. Upon submission, the corporate office telephonically verified his details and congratulated him on successful submission of his online application. He was informed that a call will be arranged within 24 hrs for submission of relevant documents in support of the application. 4. The Credit Card Application contained an elaborate set of Terms & Conditions which also contained the standard Jurisdiction and Dispute Resolution Clauses as under: 134. Dispute Resolution: In the event of any dispute arising out of or in connection to the credit services provided by the Bank to its customer, the same shall be resolved by way of arbitration conducted under the Arbitration & Conciliation Act, 1996. The proceedings shall be in English. Seat of Arbitration shall be at New Delhi. 135. Jurisdiction: Credit service disputes are subject to the jurisdiction of Courts & Tribunals at New Delhi. Having received no response from the Bank for almost two days, this guy checked the status of his application through the Bank’s website and was shocked to learn that his application was rejected on “account of insufficient documentation or bank credit norms”. My friend immediately went to meet the Branch Manager and sought an explanation. The only response the Manager could offer was that self-employed advocates have a ‘negative profile’ and thus are not entitled for Credit Cards. Our query is where we should institute the suit against the discriminatory and arbitrary action of the bank. Should it be consumer forum, arbitration or a civil court. Also, whether the contract between the bank and my friend be rendered as complete?
Answer by Sammanika Rawat, Lawfarm Researcher:
Thank you so much for writing to us.
As per the information given by you, we presume that you have not yet submitted the relevant documents to the bank. Here, instead of directly taking the matter to the court, we shall advice you to write to the HDFC Corporate office, Bombay asking them to cite the reason for rejection of your application. Meanwhile, we would recommend you to go back to the Jabalpur branch office and take the statement of the Bank Manager in writing so that you can have a written proof. Also, you can send a query to the Legal Department of HDFC asking whether there is any policy (bank credit norms) of the bank where they disallow the self-employed lawyers. If yes, then under which provision of their regulations? Also, what are the criteria for a 'negative profile' under the Bank's policies? At the same time, you can take it in writing the response of these questions from the Jabalpur branch, bank manager as well. Do not disclose it to him that you have written such an application to the main Corporate Office, Bombay as well as the legal office. Once you get all the answers from all three parties, check if there is any inconsistency in the statements made by either of them. Apart from these three parties, you should also call their consumer helpline and ask them to clear your query and submit their response to you over an email. Don't forget to ask them whether it has been accepted as a customary practice.
If all four parties provide the same respond, file an RTI to the RBI asking whether there is any policy under RBI which says "self-employed advocates shall be treated to have a negative profile". If not, whether RBI Guidelines permit a private bank to have such a policy or a customary practice. If RBI replies in affirmative, then there is no point spending money in the proceedings, however, if RBI gives a negative response to the queries, then we may recommend you to approach Consumer Forum (because it will be the least expensive route) claiming "Unfair trade Practice". RBI’s RTI response would be the best supportive evidence in your favour. Before initiating the proceeding at the Consumer Forum, you can simply send a legal notice to HDFC citing RBI Policy and warning them that if they do not stop such arbitrary discrimination and allow you to the credit card facility, you shall approach the Consumer Forum, Jabalpur against them.
Alternatively, you can go for an arbitration. Now the new amendment demands speedy disposal. However we do not recommend it as the first recourse and in case the other party claims at Consumer forum that it is an arbitration matter, then you can always say that the contract was not complete and the arbitration clause mentions about "dispute relating in connection to the credit services". Here, since you had not received the credit card, there was no scope of receiving the "credit service".
The reason we suggest you to approach Consumer Forum over Arbitration Tribunal is that the consumer forum proceedings shall be less expensive. The Consumer Forum's judgement shall be more detrimental and penalising to the Bank as it (the Bank) cannot differentiate in such an arbitrary manner towards its consumers. If neither of the ways work, you can always approach the civil court claiming that since you did not get the service, the contract was not complete and compulsory acceptance of Terms and Conditions clause amounts to coercion.
Hope your problem shall be resolved soon. Feel free to write back.
Happy to help you
Thank you for writing to us. We hope this helps you.
Professionals like Journalists, Policeman and Lawyers are blacklisted from getting credit cards or loans from the banks. It is not a written code yet. The reason behind denying the application of lawyers for credit cards is due to unstable income and also, the fact that lawyers are capable enough to find the loopholes in their system and they can seek the help from the Courts. That is why they are listed as "negative profile".
In your case, your lawyer friend has filled the online application of the bank and the corporate office congratulated him for successful submission of application. There is no implications that the application has been accepted by the HDFC bank. If the online application had been accepted and then rejected on the ground of "negative profile", only then you could have gone through Arbitration proceedings in accordance with the Arbitration clauses mentioned in the online application of the HDFC Bank. And it is also mentioned that any disputes arising out of and in connection with the credit card services provided by the bank therefore, you cannot be able to resolve the dispute through arbitration. Even if you are allowed for arbitration, it is better for you to seek help from the consumer forum for you to get the judgment in your favour.
You could file a suit in Consumer Forum instead, for the rejection of the application. You must first ask the bank whether they have any policy in relation to the rejection of credit card services to the lawyers. Either way, you can get proceed through filing a consumer readressal as they had rejected your application on the grounds of "negative profile" since it is unfair trade practice. It is also recommended to you to get a substantial evidence saying that they had rejected your application on the basis of negative profile.
In one of the Consumer cases filed in Delhi in 2008 where the complainant Nivedita Sharma was rejected for issuance of the credit card by the ICICI Bank. The Delhi State Commission gave the verdict in favour of the complainant and fined the ICICI Bank for the rejection of application on basis of "negative profile". The Commission observed that it is an act of authoritarianism. The Court held that such acts must be stopped and only criteria for such situations should be financial standing and creditworthiness of the person applying for the credit card.
Although, denying the application of lawyers for credit cards is still in practice. If you do not want to go through all the proceedings and do not want to bear all expenses then it is also suggested you to take credit card against fixed deposist banks.
I hope this helps you. Please write to us again.
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